PROVISIONAL REGULATIONS FOR THE ECONOMIC AND TECHNOLOGICAL DEVELOPMENT ZONE IN NINGBO MUNICIPALITY

PROVISIONAL REGULATIONS FOR THE ECONOMIC AND
TECHNOLOGICAL DEVELOPMENT ZONE
IN NINGBO MUNICIPALITY

(Adopted 15 June 1985 by the 14th session of the
6th Standing Committee of the People's Congress
of Zhejiang Province)

SUBJECT: ECONOMIC & TECHNOLOGICAL DEVELOPMENT ZONES

ISSUING-DEPT: ZHEJIANG PROVINCE

ISSUE-DATE: 06/15/1985

IMPLEMENT-DATE: 06/15/1985

LENGTH: 2610 words

TEXT:

CHAPTER I -- GENERAL PROVISIONS

[Article 1] These Provisions Regulations are formulated in accordance with the Constitution and laws of the People's Republic of China, as well as the relevant stipulations on establishing Economic and Technological Development Zones in the People's Republic of China.

[Article 2] The Economic and Technological Development Zone in Ningbo Municipality (hereinafter referred to as Development Zone) shall be a Development Zone under the leadership of the People's Government of Ningbo Municipality, established mainly to develop technology-intensive, production, and export-oriented projects that generate foreign exchange earnings, where some of the policies of the Special Economic Zones apply. The Development Zone at present is located at the Xiaogang area in the north-eastern part of the old city district of Ningbo Municipality.

[Article 3] The Development Zone is established with a view to promoting foreign economic and technological co-operation, importing advanced technology and scientific management expertise, developing new products and new industrial lines, opening up international markets, and enhancing the economic and technological relations and co-operation between the Development Zone and other parts of the country, thereby stimulating the latter's economic development.

Advanced technology that the Development Zone should import shall be:

1. new technology and industrial lines in key development areas and new products that are State priorities for development;

2. technology that can promote technological innovation and renew or replace products of existing State enterprises;

3. products that can open up new overseas markets or substitute for imports;

4. production technology and manufacturing techniques in areas where Chinese counterparts are still not up to the required standards;

5. technology that can be used to upgrade a certain Chinese industry or products to advanced world levels.

[Article 4] Foreigners, overseas Chinese, and compatriots in Hong Kong, Macao and Taiwan (hereinafter referred to as investors) are encouraged to invest in and initiate production enterprises, scientific research institutes and infrastructural projects that are wholly owned by them or jointly owned with State enterprises, scientific units and higher educational institutions. Forms of investment may be:

1. joint equity or co-operative joint venture with State-owned or collective enterprises;

2. wholly foreign owned enterprises;

3. other co-operative forms permitted under Chinese law.

[Article 5] The assets, due profits and other legitimate rights and interests of investors in the Development Zone are legally protected by the laws of the People's Republic of China.

Enterprises, institutions, individuals and the resident offices of foreign enterprises in the Development Zone must abide by the laws and relevant regulations of the People's Republic of China.

[Article 6] The Ningbo Administrative Committee of the Economic and Technological Development Area (hereinafter referred to as Administrative Committee), established in the Development Zone, is the working organ of the People's Government of Ningbo Municipality in charge of the Development Zone. It is also, as the authority under the leadership of the People's Government of Ningbo Municipality with the power to implement unified leadership and management in the Development Zone, the leading body in the Development Zone.

CHAPTER II -- INCENTIVES

[Article 7] The rate of income tax levied on the joint equity and contractual joint ventures and the wholly foreign owned production enterprises in the Development Zone (hereinafter referred to as Enterprises in the Development Zone) has been reduced to 15%. Those enterprises, which have an operational period of more than 10 years may, upon the approval by the tax authority of Ningbo Municipality, of the application filed by the said enterprises, be exempted from income tax in the first and second profit-making years, and allowed a 50% reduction of income tax from the third to the fifth year.

[Article 8] Cases for preferential treatment in relation to exemption from or a reduction in the local income tax levied on the Enterprises in the Development Zone shall be decided by the People's Government of Ningbo Municipality.

[Article 9] Profits earned by investors from the enterprises shall be exempt from income tax when remitted abroad.

[Article 10] Investors, who have not set up establishments within Chinese territory but who are receiving dividends, interest, rents, licensing fees and other incomes (including fees for providing industrial propriety rights and data related to proprietary technology, technological service and training) deriving from the Development Zone, shall all have income tax levied at the reduced rate of 10%, apart from those that can be exempt from income tax by law. Whether preferential treatment of further tax deduction or exemption is to be given to investors who have provided funds and equipment on favourable conditions or who have transferred technology of a sophisticated nature shall be decided by the People's Government of Ningbo Municipality.

[Article 11] The following items are exempt from Customs duties and industrial and commercial consolidated tax: building materials, production equipment, raw materials, spare parts and components imported for self-use in the Development Zone and by the enterprises; raw materials, spare parts, components and packaging materials imported for the production of export goods; means of transportation and office equipment and supplies imported for self-use.

However, retroactive payment of exempted Customs duties and industrial and commercial consolidated tax shall be required if and when the goods so produced are approved for sale on the domestic market in China.

Household articles, furniture, etc. and vehicles for personal use and in reasonable quantities brought in by investors who work at Enterprises in the Development Zone shall be exempt from Customs duties and industrial and commercial consolidated tax based on certificates issued by the Administrative Committee.

[Article 12] Except for those export products restricted by the State, products made in the Development Zone for export shall be exempt from export Customs duties and industrial and commercial consolidated tax.

[Article 13] After a joint equity venture has paid its income tax, any participant in the joint venture who reinvests his share of profits in the same or in other joint venture enterprises within Ningbo Municipality for a period of not less than five consecutive years may receive a 40% refund of the income tax already paid on the reinvested amount, subject to approval by the tax authority of Ningbo Municipality and submission of the certificate issued by the Administrative Committee.

[Article 14] Should an Enterprise in the Development Zone record a loss for the year, its annual loss for that particular year may be made up by drawing a certain amount from the next year's earnings; in the event that the earnings of the next year are insufficient for the purpose, the loss may be covered from earnings of the succeeding years, but not exceeding five years at the most.

[Article 15] Preferential treatment in the form of increasing the proportion of the domestic sale allowed enterprises, extending the contract life of the joint venture and accelerating the depreciation period of the fixed assets shall be given to those enterprises which offer advanced technology and technical equipment or which are engaged in the production of import substitutes or the production of goods in which the domestic market is deficient.

[Article 16] Preferential treatment in the form of land use fee deductions for enterprises may be given, subject to Administrative Committee approval of the application submitted by the relevant enterprises.

The earliest batch of joint equity and co-operative joint ventures and wholly foreign owned enterprises that invested in and initiated operations in the Development Zone are entitled to preferential treatment in the form of deductions in the payment of the required land development fee.

CHAPTER III -- REGISTRATION AND OPERATION

[Article 17] Investors who intend to set up enterprises and other projects in the Development Zone should submit applications as well as the necessary documentation to the Administrative Committee. After examination and approval, the department responsible to the Administration for Industry and Commerce shall check and issue the registration certificate. With this registration certificate investors can then apply for land use certificates, tax registration and open accounts with the Bank of China.

[Article 18] The various insurance policies required by enterprises must either be concluded with the China People's Insurance Company in the Development Zone or other insurance companies nominated by the State.

[Article 19] Joint ventures in the Development Zone wishing to terminate their businesses before expiry of their operational period should go through the prescribed formalities of submitting a report to that effect to the Administrative Committee and after approval is give the joint venture should carry out liquidation. The assets can be transferred and the investors' funds can be remitted out of China after the taxes and debts have been cleared.

CHAPTER IV -- LABOUR MANAGEMENT

[Article 20] The labour contract system shall apply to all Enterprises in the Development Zone. Enterprises may employ Chinese staff and workers through the recommendation of the labour service company in the Development Zone or from direct recruitment upon the approval of the labour management department of the Administrative Committee. Following assessment and the offer of employment, labour contracts should be signed between the enterprises and the workers and staff members. Enterprises may dismiss workers and staff members in accordance with the conditions stipulated in the contract and likewise workers and staff members may apply to the enterprises for resignation.

[Article 21] Matters concerning wage scales and methods of wage payment, measures concerning rewards, labour insurance and various forms of welfare shall be stipulated in the labour contract in accordance with the relevant State regulations on labour management for Sino-foreign joint venture enterprises and the Ningbo Municipality's measures for the implementation of labour management for Sino-foreign joint venture enterprises.

[Article 22] Enterprises in the Development Zone should practise the various effective measures on labour protection so that workers and staff members may work under safe and healthy conditions.

[Article 23] Enterprises in the Development Zone may employ foreigners, overseas Chinese, compatriots from Hong Kong, Macao and Taiwan to undertake technical, consultative and managerial work.

CHAPTER V -- MANAGEMENT OF PLANS, LAND AND THE ENVIRONMENT

[Article 24] All construction undertaken and all enterprises and other undertakings established in the Development Zone shall follow the master plan of the Development Zone. The department responsible for the master construction plan is invested with both supervisory and examination authority, so that the implementation of the overall plan can be guaranteed.

[Article 25] Public infrastructural development such as in land levelling, water and electricity supply, heating, communication, road construction, drainage and sewerage works shall be carried out stage by stage under the organisation of the Administrative Committee in accordance with the master plan.

[Article 26] When enterprises and other undertakings use land in the Development Zone, they should apply to the land administration department under the Administrative Committee for approval and allocation in accordance with the relevant regulations of the State, and should pay a land use fee and a site development fee as stipulated.

[Article 27] All enterprises and other undertakings in the Development Zone must strictly abide by the rules and regulations of the People's Republic of China on environmental protection. All polluted materials must be drained and disposed of in accordance with the standards for drainage and the requirements for disposal as provided by the State. Units or individuals causing pollution damage shall be dealt with in accordance with the law.

CHAPTER VI -- ORGANISATION AND ADMINISTRATION

[Article 28] The Administrative Committee of the Economic and Technological Development Zone of Ningbo Municipality shall exercise the following powers:

1. to formulate the development plans and annual plans of the Development Zone, and upon the approval of higher authorities, to organise their implementation;

2. to co-ordinate the arrangement and examination of imported projects to be built in the Development Zone, subject to the approval of higher authorities;

3. to handle the examination and allocation of land in the Development Zone, and to collect land use fees and site development fees;

4. to exercise administration of and supervision over the Enterprises in the Development Zone;

5. to exercise control over the financial revenue and expenditure of the Development Zone on behalf of the People's Government of Ningbo Municipality;

6. to provide workers and staff members for the Enterprises in the Development Zone, and to protect their rights and interests in accordance with the law;

7. to initiate public welfare facilities in the Development Zone;

8. to co-ordinate, inspect and supervise the work of the branches set up by various departments in the Ningbo Development Zone;

9. to draft and promulgate administrative provisions for the Development Zone in accordance with the laws and regulations of the State, and organise their implementation;

10. authorised by the People's Government of Ningbo Municipality and acting on its behalf, to handle foreign related matters and internal administrative issues of the Development Zone;

11. to exercise other powers authorised by the People's Government of Ningbo Municipality.

[Article 29] The Administrative Committee may, if so required, set up a working body to be in charge of the administrative affairs of the Development Zone.

[Article 30] Operational activities such as the registration of industrial and commercial enterprises, financial and foreign exchange control, taxes, education and public security shall be handled by the corresponding departments in the municipality or by their working body set up in the Development Zone.

[Article 31] Border inspection health and quarantine inspection of persons travelling from abroad into and out of the Development Zone, the inspection of commodities imported into and exported from the Development Zone, and the quarantine of animals and plants shall be carried out at the open ports in accordance with the relevant State stipulations.

[Article 32] A resident Customs office shall be set up in the Development Zone to supervise the import and export of commodities in accordance with the law.

CHAPTER VII -- APPENDIX

[Article 33] These Provisional Regulations shall come into force on the date of promulgation.