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PROVISIONS OF FUZHOU ECONOMIC AND TECHNOLOGICAL
DEVELOPMENT ZONE

(Approved at the 22nd Session of the Sixth
Standing Committee of the People's Congress of Fujian
Province on December 12, 1986.)

 



SUBJECT: ECONOMIC & TECHNOLOGICAL DEVELOPMENT ZONES

ISSUING-DEPT: FUJIAN PROVINCE

ISSUE-DATE: 12/12/1986

IMPLEMENT-DATE: 12/12/1986

LENGTH: 2237 words

TEXT:

CHAPTER I GANERAL Provisions

[Article 1] These Provisions are formulated pursuant to the Constitution of the People's Republic of China and the relevant laws and regulations with a view of developing foreign economic cooperation and technological exchanges.

[Article 2] Under the approval by the State Council of the People's Republic of China, the Fuzhou Economic and Technological Development Area (hereinafter referred to as ETDZ for short) is to be established in an area of 4.4 square kilometers in Qingzhou of Mawei of Fuzhou (capital of Fujian province).

[Article 3] The Fuzhou ETDZ Administrative Commission (hereinafter referred to as Commission for short) shall be set up to represent the Fuzhou Municipal People's Government in implementing unified guidance and management over the EDTZ.

[Article 4] The Fuzhou ETDZ shall pay its major attention to the introduction of advanced technology and scientific management skills and the establishment of industrial enterprises are technology-intensive manufacturing-specific, and/or exported-oriented.  The ETDZ may establish foreign trade enterprises to conduct independent importation for the development of the ETDZ in conformity with the provisions of the State.

[Article 5] All foreign citizens, overseas Chinese, compatriots in Hongkong, Macao and Taiwan and their enterprises or other economic entities (hereinafter referred to as foreign investors for short) are encouraged to invest in the zone in order to establish export-oriented and/or technologically advanced manufacturing enterprises and scientific research institutes.

Foreign investment may take the form of joint equity venture, non-equity cooperation with Chinese enterprises, wholly foreign ownership or other forms permitted by the relevant provisions of the People's Republic of China.

[Article 6] Domestic enterprises and institutions shall be encouraged to establish export-oriented and/or technologically advanced manufacturing enterprises and scientific research institutes in the EDTZ in cooperation with foreign investors in the form of joint equity venture or cooperation with the enterprises and institutions of the ETDZ.

[Article 7] The infrastructure in the ETDZ shall be constructed by the Commission.  Any participation by foreign investors and domestic enterprises and institutions in cooperation with enterprises in the ETDZ shall be encouraged whether the cooperation is in the form of joint equity venture of co-development.

[Article 8] The right of autonomy, assets, profits receivable and other legal rights and the interests within the ETDZ shall be protected by the laws and regulations of the People's Republic of China and these provisions.

[Article 9] Any institution and individual in the ETDZ shall be governed by the laws and regulations of the People's Republic of China and these Provisions.

CHAPTER II ADMINISTRATION AND MANAGEMENT

[Article 10] The Commission shall exercise the following functions and powers:

(1) To draw up the development programme and annual plans of the ETDZ, and to arrange and implement them upon approval;

(2) To formulate provisions for the administration of the ETDZ, and to arrange for their implementation upon approval;

(3) To undertake overall planning of the investment projects in the ETDZ, and to examine and approve them in accordance with the relevant provisions;

(4) To undertake the management, approval and allocation of land in the ETDZ;

(5) To manage the infrastructure facilities in the ETDZ and to determine the standards of fees to be charged for their use;

(6) To manage and supervise the enterprises and institutes in the ETDZ;

(7) To manage the revenue and expenditure accounts of the ETDZ;

(8) To inspect and supervise the activities of the subordinates establishments of the municipality in the ETDZ;

(9) To coordinate the activities of the establishments in the ETDZ that are not subordinates of the municipality;

(10) To implement the (policy) requirement of a administrative management of labor in the enterprises in the ETDZ in maintaining the legal rights and interests of the workers and staff:

(11) To administer the provisions on environmental protection and prevent pollution in the ETDZ;

(12) To develop non-profit undertakings of public interests in the ETDZ;

(13) To manage the import and export trade of the ETDZ;

(14) To handle ordinary foreign economic affairs of the ETDZ;

(15) To provide consulting service and other services to foreign investors;

(16) To exercise other functions and power authorized by Fuzhou Municipal People's Government.

[Article 11] The examination and approval authorities of the municipality shall, within 30 days upon the receipt of all the documents concerning the agreements, contracts and articles of association for the purpose of establishing enterprises by foreign investors in the ETDZ, notify the applicant of the approval results.

[Article 12] AEE the The affairs concerning taxation, finance, foreign exchange industrial and commercial administration, customs, commodity inspection and environment protection shall be taken care of by the departments in charge or the subordinate offices thereof in the area pursuant to the relevant laws and regulations.

CHAPTER III PREFERENTIAL TREATMENT

[Article 13] Direct foreign investment enterprises (hereinafter referred to as DFIEs for short) which engage in manufacturing shall pay enterprise (corporate) income tax at a reduced rate of 15% on taxable income from production and business operation or other sources.  In the event that the DFIEs intend to operate for a period of more than 10 years, they shall be exempted from enterprise income tax for a period of 2 years as from the first profit-making year, followed by a 50% reduction from the third to the fifth year upon application by the DFIEs and subject to the approval of the Fuzhou tax authorities.

Upon termination of tax exemption and partial deduction periods the DFIEs which are technologically advanced shall continue to enjoy another 3 year of 50% reduction of the enterprise income tax; and those DFIEs which are export-oriented shall be granted a 10% reduction of the enterprise income tax on the condition that 70%, in value terms, of their annual total output is exported in the current year.

[Article 14] DFIEs shall be exempted from local income tax.

[Article 15] No income tax shall be levied on the amount of profits which is remitted abroad by foreign investors.

[Article 16] Except for those exempted from income tax in accordance with the relevant provisions, dividends, interest, rent, royalties and other gains orginating from the ETDZ by foreign investors who have no establishment in the territory of China shall be subject to income tax at the reduced rate of 10%.

Income tax shall be reduced or exempted for funds and equipment provided at favorable terms or the technology so transferred is of an advanced nature, subject to the approval by the Fuzhou Municipal People's Government.

[Article 17] In the event that foreign investors reinvest their profits to establish or expand their export-oriented or technologically advanced DFIEs in the ETDZ for a period of more than 5 years, the income tax paid shall be wholly refunded to the investors, subject to approval by the tax authorities.  The tax refunded shall be returned in case the investment is withdrawn prior to the end of the fifth operation year.

[Article 18] Building materials, production equipment, raw materials, spare parts, components, transport vehicles and office equipment imported by the management offices and enterprises in the ETDZ shall be exempted from import duties and consolidated industrial and commericial tax (or product tax and value added tax).  But these DFIEs shall, in accordance with the relevant provisions, have to pay import duties for those raw materials, parts and components which were imported duty-free once the products processed therefrom are sold in the domestic market.

[Article 19] Exports manufactured by FLEs shall be exempted from export duties.  These products shall also be exempted from consolidated industrial and commercial tax except for those taxable products that are so prescribed by the State.

[Article 20] Products manufactured by DFIEs which are on par with advanced domestic standards and are eligible for import substitution shall enjoy a two-year exemption of the consolidated industrial and commercial tax on production or sales, subjesct to approval by the relevant provincial departments.

[Article 21] Household appliances and transport vehicles which are brought into China by the foreign employees in the DFIEs or foreign investors or personnel residing in the ETDZ for their own use shall be exempted from import duties and consolidated industrial and commercial tax provided the quantity to be carried in is justifiable and has the necessary documents issued by the Commission.

[Article 22] Losses of the current operation year incurred by the DFIEs shall be made good by using income from the following year of an amount equivalent to the loss to be covered and similarly for subsequent years but not exceeding five years consecutively.

[Article 23] Land users shall acquire the land use right in accordance with relevant provisions and pay a land-use fee.  Subject to approval by the Commission, export-oriented enterprises shall be exempted from the land-use fee for a period of 10 years and technologically advanced enterprises, 5-10 years provided that these enterprises are established before the end of 1990.

[Article 24] Overseas Chinese and compatriots from Hongkong, Macao and Taiwan who have invested to establish enterprises or non-profit undertakings in the interests of the public in the ETDZ may duly employ their relatives living in the countryside to work in these enterprises and the respective registered permanent residence of these Chinese relatives shall be transferred to the ETDZ.

[Article 25] Preferential treatment measures for domestic associated enterprises shall be formulated by the Fuzhou Municipal People' Government.

CHAPTER IV REGISTRATION AND OPERATION

[Article 26] Foreign investors and domestic enterprises and institutions which intend to initiate all types of economic activities in the ETDZ shall apply to the Commission.  After examination and approval, the applicant(s) shall obtain land use certificates, register with the industry and commerce administration and tax authorities with reference to the registration certificates.

[Article 27] DFIEs shall open their accounts with the local branch of the Bank of China or of other banks whose establishments in the zone has been approved by the People's Bank of China.

DFIEs shall have to take out their various insurance policies at the insurance companies in the territory of China.

[Article 28] Enterprises located inside the ETDZ may conduct autonomous management and operations within the scope of business authorized by the department in charge of registration.

[Article 29] Enterprises in the ETDZ intending to terminate the operations shall apply to the Commission with stating to reasons for termination.  They shall follow the procedure regarding termination of business and shall liquidate their and creditor rights.  After termination, the assets of the terminating enterprises may be transferred and the foreign investors' funds may be remitted abroad.

CHAPTER V LABOR MANAGEMENT

[Article 30] DFIEs shall be responsible for the structuring of the respective establishments and the required personnel independently but the matter should be reported to labor personnel departments of the ETDZ for the record.

Once they are approved, the annual labor plans of the State-owned and collective enterprises and institutions in the ETDZ shall be executed by the labor and personnel departments of the ETDZ.

[Article 31] DFIEs may independently recruit the technical, consulting and managerial personnel and workers they need, or they may entrust the labor service corporation of the ETDZ to employ labor on their behalf.  The DFIEs can dismissor discharge workers or staff from employment.

[Article 32] DFIEs may independently determine the standards and forms of wages and the systems of rewards and subsidies of the Chinese workers and staff in the enterprises, and the DFIEs shall pay or allocate funds for labor insurance, welfare and housing subsidies for the Chinese workers and staff in the enterprises in accordance with

[Article 33] DFIEs shall have in place a variety of effective labor protection measures and shall provide the necessary safety sanitary working conditions for the workers and staff.

[Article 34] Workers and staff in the DFIEs may establish their according to law and conduct union activities to protect the legal rights and interests of workers and staff in the DFIEs.

CHAPTER VI SUPPLEMENTARY PROVISIONS

[Article 35] These Provisions shall enter into force on the date of promulgations.

[Article 36] The right to the interpretation of these Provisions, regards their application shall be vested with the Fuzhou Municipal People's Government.