PROVISIONS ON PREFERENTIAL TREATMENT FOR
TECHNOLOGY AND KNOWLEDGE-INTENSIVE
FOREIGN INVESTMENT ENTERPRISES IN SHANGHAI

(Promulgated on April 3, 1988 by the Shanghai
People's Government)

 

SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT

ISSUING-DEPT: SHANGHAI MUNICIPALITY

ISSUE-DATE: 04/03/1988

IMPLEMENT-DATE: 05/01/1988

LENGTH: 707 words

TEXT:

[Article 1] These Provisions are hereby formulated to encourage more foreign investors to make investment in technology and knowledge-intensive industrial projects in accordance with the "Interim Provisions of the State Council of the People's Republic of China Concerning the Reduction and Exemption from Enterprise Income Tax and Industrial and Commercial Consolidated Tax in the Special Economic Zones and Fourteen Coastal Cities" and the actual conditions in the Shanghai city.

[Article 2] Sino-foreign equity or contractual joint ventures and wholly foreign-owned enterprises (hereinafter referred to as foreign investment enterprises) located in the old urban area of Shanghai may enjoy the preferential treatment if they are technology and knowledge-intensive enterprises.

The above-mentioned foreign investment enterprises shall pay their income tax at a reduced tax rate of 15%.

[Article 3] Foreign investment enterprises in the Shanghai city need to apply for approval before they are entitled to enjoy the preferential treatment.

[Article 4] Foreign investment enterprises in the Shanghai city that meet any one of the folowing requirements may enjoy the preferential treatment as follows:

(1) the enterprise can provide advanced manufacturing technology and process which are urgently needed in the Shanghai city, produce new products (including new materials, key components and parts) which are urgently needed in the Shanghai city and promote the development and utilization of new energy in the Shanghai city;

(2) the enterprise applies advanced scientific research results which can greatly raise and improve productivity, products quality and efficiency, and bring about lower production cost and less energy and materials consumption, as well as increase export so as to generate foreign exchange;

(3) the enterprise can promote technical innovation in the industry;

(4) the enterprise can provide key patented technology and know-how (including advanced formula) which are urgently needed in the Shanghai city.

[Article 5] The relevant departments of the Shanghai Municipality, districts and counties which are responsible for negotiation with foreign investors on the establishment of foreign investment enterprise shall render their own opinions and give the reasons in the feasibility study of foreign investment enterprise on whether the enterprise should be entitled to enjoy the preferential treatment for technology and knowledge-intensive enterprise. When the Shanghai Foreign Economic Relations and Trade Commission examines the application for the establishment of foreign investment enterprise, the Commission shall consult the opinions of the relevant commissions, offices and bureaus regarding whether this foreign investment enterprise should be entitled to enjoy the preferential treatment and render its own decision in principle.

[Article 6] Foreign investment enterprise which is entitled to the preferential treatment for technology and knowledge-intensive enterprise shall, two months before expiration of its enterprise income tax period, apply to the department in charge for extension (application forms shall be printed in a standard form by the Shanghai Foreign Economic Relations and Trade Commission). After having received the application, the department in charge shall render its own opinions and send the application to the Shanghai Foreign Economic Relations and Trade Commission. Having received the application, the Shanghai Foreign Economic Relations and Trade Commission shall, within a month, decide on whether the enterprise should be entitled to enjoy the preferential treatment by consulting the Shanghai Science and Technology Commission, Shanghai Economic Commission and other relevant departments. The Shanghai tax bureau shall then make the arrangements for the exemption or reduction of enterprise income tax in accordance with the decision of the Shanghai Foreign Economic Relations and Trade Commission.

[Article 7] The Shanghai Foreign Economic Relations and Trade Commission has the authority of interpreting these Provisions.

[Article 8] These Provisions shall come into force on May 1, 1988.