PROVINCIAL PROVISIONS FOR ENCOURAGING FOREIGN
INVESTMENT IN HEILONGJIANG PROVINCE

(Promulgated on December 18, 1986)

 

 

SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT

ISSUING-DEPT: HEILONGJIANG PROVINCE

ISSUE-DATE: 12-18-1986

IMPLEMENT-DATE: 01-01-1987

LENGTH: 2293 words

TEXT:

[Article 1] The following Provisions are formulated for implementing the "Provisions of the State Council of the People's Republic of China for the Encouragement of Foreign Investment", improving the investment climate for foreign investment in the province, and to encourage foreign investors to set up Sino-foreign equity and non-equity joint ventures and wholly foreign-owned enterprises (hereinafter referred to as foreign investment enterprises) in the province.

[Article 2] Foreign investment enterprises which produce for export (hereinafter referred to as export enterprises) or possess advanced technology (hereinafter referred to as technologically advanced enterprises), and those engaged in natural resources development or energy conservation projects, agricultural, forestry, fishery and animal husbandry development are entitled to enjoy the following preferential treatment.

[Article 3] Preferential treatment in tax.

(1) At the expiration of the period of reduction or exemption of corporate income tax and local income tax (surcharge) in accordance with the State's provisions, export enterprises which have a contract life of more than 10 years will continue to enjoy exemption of the local income tax if their exports in value terms amount to more than 50% of their production of the same year.

(2) Apart from entitlement to an exemption or reduction from corporate income tax as stipulated by the State, technologically advanced enterprises having a contract life of more than 10 years, those engaged in natural resources development, energy conservation projects, and agricultural, forestry, fishery and animal husbandry development are exempted from the local income tax for eight years starting from their first profit-making year.

(3) Foreign investment enterprises which are entitled to reduction or exemption of corporate income tax in accordance with the State's provisions will also enjoy reduction or exemption of the local income tax.

(4) Foreign investment enterprises are allowed to pay their tax with renminbi income earned from their operations and sales instead of using their foreign exchange.

(5) Enterprises and projects which fulfill the requirements of Article 2 of this Provisions are exempted from the vehicle and ship license tax and the property tax.

[Article 4] Reduction of site use fee and municipal construction fee.

(1) The site use fee (i.e. site development fee and land use fee) and municipal construction fee for the enterprises and proejcts which fulfill the requirements of Article 2 of this Provisions shall be set at Rmb5-10 per sq meter per year except those located in busy urban sectors of large cities.  Land use fee for enterprises and projects which pay their land development fee through a lump sum payment and the fee for those enterprises undertaking the development of land themselves shall not be charged at a rate higher than Rmb1.5 per sq meter per year.

(2) Enterprises and projects which fulfill the requirements of Article 2 of this Provisions are exempted from the land use fee for five years.

(3) Enterprises and projects which fulfill the requirements of Article 2 of this Provisions are exempted from the municipal construction fee.  Other enterprises are subject to 5% of the total construction costs for the municipal construction fee.

[Article 5] Assistance in balancing foreign exchange expenditure and revenue.

(1) Foreign investment enterprises may solve their foreign exchange accounts problems through comprehensive compensation trade agreement.  Subject to approval by the provincial foreign trade authorities, foreign investment enterprises may export commodities which are not subject to unified control of State foreign trade corporations, export quotas and export license control of State foreign trade departments, through marketing channels arranged by the foreign investors.

(2) foreign investment enterprises may use their legitimate foreign exchange income or loans borrowed from foreign sources as mortgage to apply for renminbi loans from the Bank of china and other financial institutions authorized by the People's Bank of China.

(3) Subject to the supervision of foreign exchange control departments, foreign investment enterprises may adjust the foreign exchange surpluses and deficiencies among themselves.

(4) Commodities which are mass produced by foreign investment enterprises, providing their quality and property are similar to those of imported goods, they are selling at the same price as imported ones and they can be delivered on schedule as required by the domestic buyers, may be accepted as import-substitutes.  The foreign investment enterprises which produce such products may have their accounts-as much as 100% - settled in foreign exchange with the domestic buyers.  The provincial foreign trade authorities shall prepare a catalogue of commodities which are eligible under the scheme, subject to ratification by the foreign exchange control departments for execution.

(5) Foreign investment enterprises shall keep their foreign exchange accounts in balance.  Export enterprises and technologically advanced enterprises which are in temporary difficulties in balancing their foreign exchange accounts may apply to the local departments in charge or government offices for assistance through the Chinese units which their Chinese partners are subject to.  The local departments in charge or government offices may lend the applicants foreign exchange funds or provide swap service using the foreign exchange earnings retained for the locality.  The foreign investment enterprises may, at the same time, apply to the provincial foreign exchange control departments for allocation or borrowing of a certain amount of foreign exchange quotas from the net foreign exchange balance of all foreign investment enterprises in the province.

[Article 6] Preferential treatment in materials supply and transport arrangement.

(1) The provision of cement timber and steel needed for the construction of infrastructure of foreign investment enterprises is dependent on the source of the Chinese investment of the enterprises concerned.  If the Chinese investment comes from the State budget, the foreign investment enterprise shall have its materials allocated from the State quotas.  If the Chinese investment does not come from the State budget, the materials shall be supplied through market sources.  Materials including timber, steel and coal needed for production purposes for foreign investment enterprises shall be included in the State and provincial production plans according to the respective sources of those materials.  In case the State and the provincial production plans fail to cover all the materials needed, the insufficient part shall be supplied with priority from market sources.

(2) Materials supply departments in regions, cities and counties where foreign investment enterprises are relatively more concentrated shall arrange the supply of materials for these enterprises independently and with special attention.

(3) Departments concerned shall give priority to processing of water, land and air transport plans submitted by export enterprises and technologically advanced enterprises.  These enterprises shall prepare and submit their periodic plans on the usage on rail transport to the local railway bureaus concerned basing on their production and marketing plans and in line with the relevant laws.  Departments concerned shall actively assist enterprises to arrange vehicle transport for exports which have not been included in the periodic plans.

[Article 7] Assistance in loan financing.

(1) Short-term loans for enterprises and projects which fulfill the requirements of Article 2 of this Provisions shall be provided with priority, subject to ratification by banks.

(2) Apart from the normal foreign exchange loans service, Bank of China may also provide foreign investment enterprises construction capital through loans from international banks consortium, buyer's credits, syndicated loan arrangements and other common international financial practices including issuing bonds, renminbi loan service with foreign exchange as mortgage, overdraft service and loan service with property or contracts as mortgage.

(3) If the Chinese partners to a foreign investment enterprise do not have sufficient funds to invest as share capital to the enterprise, banks may, according to the actual situations, provide the Chinese partners with funds through such means as issuing bonds or shares on behalf of the enterprise in question.

[Article 8] Reduction of subsidies paid to the State.

(1) Enterprises and projects which fulfill the requirements of Article 2 of this Provisions are exempted from all subsidies paid to the State for their Chinese staff and workers except the pension for retired workers, the unemployment insurance and housing allowance for Chinese staff and workers according to the relevant laws.

(2) Housing allowance paid by all Sino-foreign joint venture enterprises for their Chinese staff and workers shall be computed and paid at a rate not higher than Rmb30 per person per month.  The money collected is to be used by the Chinese partners to the enterprises to subsidize the construction or purchase of houses for their Chinese staff and workers.  If the Sino-foreign JV enterprises incur losses after paying the housing allowance, they may enjoy reduction or exemption of the said allowance.  The extent of reduction shall be decided by the local government offices accordingly.  Housing allowance shall not apply to Sino-foreign JV enterprises which provide housing service to their Chinese staff and workers and in case which the Chinese staff and workers have their own houses.

(3) Reduction of the various State Subsidies to Chinese staff and workers may be granted to enterprises which are not entitled to the exemption preferential treatment.  They may pay the various subsidies at a rate of Rmb 10 per person per month for their Chinese staff and workers to the financial departments at the same level with the enterprises.

[Article 9] No departments are allowed to levy extra charges on foreign investment enterprises except payments to be collected in accordance with the regulations stipulated by the State Council and the Heilongjiang provincial people's government.  Foreign investment enterprises have the right to refuse any unreasonable charge imposed on them.  Local economic committees and the provincial economic and planning committee and departments concerned shall be responsible for the supervision of the implementation of this rule.

[Article 10] The people's governments at all levels and the relevant departments in charge shall guarantee foreign investment enterprises enjoy management autonomy in accordance with the laws and provisions so that they can manage their business with advanced scientific methods.

[Article 11] Foreign investment enterprises have the autonomy, basing on their enterprise contracts and articles of association, to work out their own development programs and production and marketing plans; set up their own management and administration structures; decide on the distribution of corporate profits and matters relating to the income and expenditure of enterprises; set prices on products which are beyond the control of price authorities at different levels; decide on the wage levels, forms of payment, allowance, bonus and penalty systems of enterprises; recruit, employ and dismiss staff and workers and determine the departments and staff arrangements within the enterprises.  Banks shall not exercise supervision on the wage funds for foreign investment enterprises.  Local labor departments and authorities which the enterprises are subject to shall be responsible for the arrangements for staff and workers who are dismissed by the foreign investment enterprises.

[Article 12] The people's governments at all levels and relevant departments in charge shall strengthen their coordination and improve their working efficiency.  The Foreign Investment Coordination Group of the Heilongjiang provincial people's government and its subsidiary offices, together with other government departments concerned, will set up a joint office to provide comprehensive government service to foreign investors in the province.  The joint office shall give an officianl answer to applications subject to the approval authority of the province no later than 30 days after receipt of the agreements, contracts, and articles of association of the enterprises applying for establishment.

[Article 13] Enterprises and projects which fulfill the requirements of Article 2 of this Provisions shall submit a formal application for their qualifications to the provincial foreign economic relations and trade department through the economic and trade departments in their localities.  Subject to confirmation by the provincial foreign trade department and other relevant departments, certificates showing their qualifications shall be issued to those qualified enterprises.  A list of these enterprises and other relevant documents shall be sent to the Ministry of Foreign Economic Relations and Trade for the record and copies of which shall be sent to the local departments concerned as proofs showing which enterprises are entitled to enjoy the preferential treatment stipulated in this Provisions.

[Article 14] This Provisions shall go into force as from January 1, 1987.

The right to interpret this Provisions is vested with the Heilongjiang Provincial Foreign Economic Relations and Trade Department.