PREFERENTIAL POLICIES OF SHENYANG MUNICIPAL GOVERNMENT
FOR ABSORBING FOREIGN INVESTMENT

(Issued by Liaoning Province on March 20, 1990)

 

 

SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT

ISSUING-DEPT: LIAONING PROVINCE

ISSUE-DATE: 03/20/1990

IMPLEMENT-DATE: 03/20/1990

LENGTH: 929 words

TEXT:

[Article 1] The following preferential policies for absorbing foreign investment in Shenyang, capital of Liaoning province are hereby formulated in order to attract foreign investment and technology to promote economic development in the open zone of the Liaodong Peninsula.

[Article 2] The Shenyang municipal government is authorized to approve the establishment of Sino-foreign equity or cooperative joint ventures (hereinafter referred to as "joint ventures") each with a total investment of less than US$ 30 million, if they are productive ventures satisfying the State plan for attracting foreign investment with necessary construction and operation conditions, do not need the State to help balance their foreign exchange receipts and expenditures, and their products for export do not need quota and license from the State.

[Article 3] The Shenyang municipal government is authorized to approve the establishment of wholly foreign-owned enterprises with a total investment of less than US $ 30 million except for projects that the State has assigned a special department for approval.

[Article 4] The Shenyang foreign economic relations and trade commission can approve the establishment of for eign trade enterprises conducting import and export business for Shenyang municipality and vest them with the power to conduct foreign trade.  It can also approve the eligible enterprises or enterprise groups to conduct import and export business for their own needs and vest them with the power to conduct foreign trade.

[Article 5] The Shenyang municipality may approve the establishment of enterprises or branche offices and hold trade talks and exhibitions abroad, except in HongKong, the Soviet Union and East European countries.

[Article 6] Productive joint ventures may pay enterprise income tax at rate of 15% if they satisfy each of the following conditions:

(1) Technology and knowledge-intensive projects;

(2) A project with foreign investment US $ 30 million;

(3) Construction projects of communications, energy or harbor.

[Article 7] Joint venture projects which not satisfy the above requirements may pay enterprise income tax at rate of 24% if they are productive projects.

[Article 8] Joint ventures with a term of more than 10 years are exempt from income tax for the first two years after they begin making profits and enjoy a 50% reduction in the following three years.  For joint ventures engaging in farming or forestry which earn lower profits, they may enjoy a 15 to 30% reduction for another 10 years in addition to the above-mentioned preferences.

[Article 9] Joint ventures that export more than 70% of their annual output (in terms of value) may pay enterprise income tax at rate of 15%.

[Article 10] The Shenyang municipal government encourages the establishment of export-oriented or technologically advanced enterprises.  The municipal foreign economic relations and trade commission shall be responsible for assessment.  The foreign partners of export-oriented or technologically advanced enterprises may remit their lawful profits out of China without paying remittance tax.

[Article 11] For joint ventures assessed as tecchnologically advanced enterprises may enjoy a 50% reduction in income tax for another three years after the expiration of the two years exemption and three years reduction period.

[Article 12] Imports by a joint venture of the following materials shall be exempt from customs duty and from consolidated industrial and commercial tax:

(1) Machinery, equipment, spare parts, components and other materials that are stipulated in the joint venture contract to be part of the foreign partner's investment;

(2) Machinery, equipment, spare parts, components and other materials imported with funds constituting part of the joint venture's total investment;

(3) Machinery, equipment, spare parts, components and other materials imported by the joint venture with additional capital;

(4) Raw and processed materials, auxilliary materials, components, spare parts and packaing materials imported from abroad by the joint venture for use in the production of products for export;

[Article 13] Products manufactured by joint ventures for export are exempt from consolidated industrial and commercial tax.

[Article 14] Joint ventures engaged in energy development, railway, highway or port construction, deep-sea fishing, scientific research, education or medical and health care are exempt from import customs duty and consolidated industrial and commercial tax for importing advanced and machinery, equipment and materials, that are not available domestically, needed for the joint ventures' construction of their factories (sites) and installation and reinforcement of their machinery and equipment that are stipulated in the contracts.

[Article 15] Joint ventures enjoy full decision-making power in the employment and dismissal of workers, business management and sales.  The foreign partner can contract for running the entire venture and conduct business independently according to international practice.  The Chinese partner may not hold the position of general manager or deputy general manager.

[Article 16] In establishing a joint venture, the foreign partner can contract to run a certain workshop or whole factory, and exercise two different management systems in one factroy.

[Article 17] These policies shall come into force from the date of their promulgation.