MEASURES CONCERNING LAND USE ADMINISTRATION
FOR SINO-FOREIGN JOINT EQUITY ENTERPRISES
IN SHANGHAI MUNICIPALITY

(Issued on October 30, 1986 by the Shanghai Municipal
People's Government)

 

SUBJECT: EQUITY JOINT VENTURES

ISSUING-DEPT: SHANGHAI MUNICIPALITY

ISSUE-DATE: 10/30/1986

IMPLEMENT-DATE: 11/01/1986

LENGTH: 1730 words

TEXT:

[Article 1] These Measures are formulated in accordance with the provisions of the Law of the People's Republic of China on Sino-foreign Joint Equity Ventures and other laws, and take into account the actual circumstances of Shanghai Municipality.

[Article 2] The Shanghai Municipal Land Administration Bureau (hereinafter referred to as the Municipal Land Bureau) is the organ in charge of the administration of land used by Sino-foreign Joint Equity enterprises in Shanghai Municipality (hereinafter referred to as Joint enterprises).

[Article 3] These Measures are applicable to joint ventures which use land in Shanghai Municipality for their operations.

[Article 4] The term "land use fees" used in these Measures refers to fees charged for the use of the natural resources of the land and does not include the fees charged for demolition, removal and reallocation and infrastructure construction costs.

Applications by a joint ventures for use of land will be carried out by the Chinese party to the joint enterprise.

[Article 5] Where requisition of land is involved or presently held land is to be used for the operation of a joint enterprise in Shanghai Municipality, the Chinese party to the joint enterprise will apply to the Municipal Land Bureau for provisional registration by presenting the enterprise's approved project proposal. The Municipal Land Bureau will refer the matter to the department for planning administration for selection of a site and after verification a provisional land use licence will be issued.

A provisional land use licence will be valid for one year. An application for an extension of the licence term may be lodged at least ten days before its expiry. The extension term may not exceed half a year. Failure to apply for an extension within the prescribed term will get regarded as voluntary renunciation of a licence.

[Article 6] The joint enterprise shall go through procedures for application for land use with the Municipal Land Bureau within a month of receiving a certificate of approval for the establishment of the venture and will obtain a certificate of land use.

Joint enterprise may only use land after receiving a certificate of land use. If changes are to be made to the way the land is used, the joint enterprise shall go through procedures for application for land use again.

Where a land use term has expired or where a joint enterprise terminates with approval due to other reasons, the enterprise shall surrender the right to use the land and hand in the certificate of land use for cancellation. Where a joint enterprise requires continued use of the land it shall go through procedures for the extension of the land use term with the Municipal Land Bureau at least six months before the expiry date.

[Article 7] Joint enterprise which use State-owned land must pay land use fees. A joint enterprise will take responsibility for all demolition, removal and reallocation expenses which result from its use of the land, infrastructure construction costs within the scope of its use of the land, construction costs for the proportion of public utilities and infrastructure facilities which are particular requirements of or for the exclusive use of the joint enterprise.

Where rural collective economic organisations use collective land to operate joint enterprise the construction costs for public utilities and infrastructure facilities will all be borne by the joint enterprises themselves.

[Article 8] Land use fees for Shanghai Municipality are divided into six categories of ten grades, in accordance with the geographical environment and the usage of the land. The highest rate is 100 yuan per square metre per year and the lowest rate is 0.5 yuan per square metre per year. The detailed amounts within the various grades will be verified by the Municipal Land Bureau.

A joint enterprise may also pay its land use fee in accordance with a rate of not more than 5% of its turnover, subject to examination and approval by the Municipal Land Bureau.

[Article 9] Detailed proposals for the readjustment of the rates of land use fees in Shanghai Municipality will be prepared by the Municipal Land Bureau in accordance with actual conditions and will be implemented following submission to the Municipal People's Government for approval.

The interval between readjustments of the rates of land use fees will be no less than three years and the range of readjustment each time will not exceed 30%. Following the readjustment of the rates of land use fees, joint enterprise shall pay in accordance with the new rates. However the rate of land use fees during the first five years of use of the land by the joint enterprise will not be readjusted. Land use fees which are based upon a percentage of turnover revenue will not be readjusted.

[Article 10] Land use fees will be calculated from the date of issue of the certificate of land use. However, the enterprise will be exempt from land use fees for the first calendar year of land use if its us of the land has not exceeded six months. One-half of the fee will be payable if the period of use exceeds six months but is less than one year.

[Article 11] Joint enterprise must pay land use fees on time in two instalments each year based on the notice of assessment issued by the Municipal Land Bureau. The first instalment will be paid at the end of June and the second instalment at the end of December. A daily fine of 1% of the total payable amount of land use fees will be imposed in the case of late payments.

[Article 12] Before the commencement of business operations or the start-up of production, joint enterprise, with the exception of those which construct buildings for sale, may apply to the Municipal Land Bureau for permission to pay land use fees at half the stipulated rate.

[Article 13] Joint enterprise which construct buildings for sale shall pay land use fees to the Municipal Land Bureau from the date the land is first used to the date of the sale of the building according to the stipulated rates. Measures for the payment of land use fees by the buyers of such buildings will be formulated separately.

[Article 14] Joint enterprise which construct buildings for leasing will pay land use fees from the date the land is first used to the date of expirty of the term of the joint enterprise.

[Article 15] Where a joint enterprise operates from a leased building, land use fees will be paid to the Municipal Land Bureau by the lessor of the building.

[Article 16] Joint venture projects involving municipal infrastructure facilities, culture, education, health or scientific research, where profit-making is not the principal objective, may enjoy a reduction in or exemption from land use fees.

[Article 17] Except for those enterprise located in busy urban sectors of the city proper, exporting enterprise and technologically advanced enterprise will be exempt from land use fees for the first three years after their establishment and be levied at half of the lowest stipulated amount from the fourth year onward, but the maximum amount payable will not exceed 2.5 yuan per square metre per year.

[Article 18] Where a joint enterprise has difficulty paying land use fees due to reasons involving force majeure, the land use fees may be deferred, reduced or an exemption may be granted following examination and approval by the Municipal Land Bureau.

[Article 19] Where municipal, district and county enterprises use collectively-owned land to operate joint enterprise, all shall go through the procedures for the requisition of land in accordance with the provisions of the relevant State laws.

Rural collective economic organisations which use collectively-owned land to operate joint enterprise, either individually or jointly with other enterprises, may go through the procedures for the requisition of land in accordance with the provisions of the relevant State laws. They may also capitalise their right to use the land, as their capital contribution to the joint enterprise but must go through the procedures for use of land in accordance with the provisions of the relevant State laws.

[Article 20] A Chinese party to a joint enterprise who uses the capitalised land use rights as investment may determine the amount of capital contribution through consultation, with reference to the total amount of land use fees payable over the duration of the joint enterprise, and details will be filed with the Municipal Land Bureau. However, a Chinese party to a joint enterprise which uses State-owned land shall pay land use fees to the Municipal Land Bureau in Accordance with the regulations.

Where a Chinese party to a joint enterprise uses capitalised land use rights as investment, land use fees will not be readjusted during the term of the joint enterprise.

[Article 21] Joint ventures only have the right to use the land that has been approved for their use but do not have the right of ownership. Joint enterprise may not purchase, sell, lease or illegally assign the land that they use, nor may they illegally occupy or use land without approval, alter the usage of the land without autourisation, or violate other provisions of the State Land Management Law.

The Municipal Land Bureau may take disciplinary action against any joint enterprise which violates the provisions of the previous paragraph.

[Article 22] Land use administration for Sino-foreign co-operative enterprise and enterprises with sole foreign investment will be handled with reference to these Measures.

[Article 23] The Municipal Land Bureau will be responsible for the interpretation of these Measures.

[Article 24] Prior to the implementation of these Measures, land use fees for joint enterprises which were established before the implementation of these Measures will be handled according to the original contract. After the implementation of these Measures, land use fees may be handled according to the original contract or, ofter consultation between the various parties to the contract, land use fees may be handled according to these Measures.

[Article 25] These Measures will be effective from 1 November 1986.