REGULATIONS ON ECONOMIC ASSOCIATION
BETWEEN THE XIAMEN SPECIAL ECONOMIC ZONE AND
INLAND AREAS OF CHINA

(Approved at the Eighth Session of the Standing
Committee of the Sixth Fujian Provincial
People's Congress on July 14, 1984)

 

 

SUBJECT: SPECIAL ECONOMIC ZONES

ISSUING-DEPT: FUJIAN PROVINCE

ISSUE-DATE: 02/24/1985

IMPLEMENT-DATE: 02/24/1985

LENGTH: 757 words

TEXT:

[Article 1] The present regulations are formulated in line with the relevant laws and decrees of the People's Republic of China, aiming at strengthening the economic and technical cooperation between the special zone and inland areas of China and promoting the growth of the national economy.

[Article 2] Enterprises and organizations of various provinces, municipalities and autonomous regions and central government departments may, on the principle of equality and mutual benefit, make investment in the special zone by running industrial, commercial, communications and transport undertakings, public utilities, building trade, restaurants, and undertakings in science, technology, culture, education and other fields.

The above-mentioned enterprises and undertakings are encouraged to invest in Xiamen City in the area of upgrading the technology of the city's existing enterprises.

[Article 3] Forms of the economic association between the special zone and the inland areas are:

(1) Tripartite association among those from the inland areas and the SEZ and foreign firms;

(2) Association between the inland areas and the special zone; and

(3) Enterprises wholly-owned by inland areas and other forms of participation.

The first two forms of association, (1) and (2), may take form of stock joint venture or contractual cooperation.

[Article 4] An inland enterprise or undertaking which invests in the SEZ must produce the certificate proving its legal person status and the certificate issued by the relevant county department or department(s) above the county level, when they negotiate with the relevant units of the SEZ.0 Once a contract is signed it must be examined and approved by the Xiamen City People's Government, followed by registration with the Xiamen City Administration for Industry and Commerce.

[Article 5] Associated enterprises and other undertakings established in the SEZ should be subordinated to the overall planning and unified management of the SEZ, abide by the zone's laws and decrees and their legitimate rights and interests are protected by law.

[Article 6] The income tax rate is 15% for those associated enterprises jointly established by the SEZ and an inland area if foreign equity is involved in such an associated enterprise.0 Those without foreign equity involvement but are engaged in undertakings of a developmental nature will enjoy tax deduction or exemption for one to three years starting from the first profit-making year with the approval of the Xiamen Tax Bureau.

[Article 7] Products of the associated enterprises are mainly for export.

[Article 8] An associated enterprise should open an account with a SEZ-based bank.0 That part of the net profit belonging to the inland party may be freely remitted to the inland areas; it may also be used to purchase equipment and materials in the SEZ or the international market for the inland area after paying the customs duties according to the customs regulations.

[Article 9] An appropriately higher percentage may be offered in the foreign exchange part of the profit sharing for the inland party in associated enterprises established between the SEZ and an inland area if no foreign equity is involved.0 The specific ways of doing this may be discussed and determined by the two parties concerned.

[Article 10] The number of personnel belonging to the inland party of an associated enterprises who are to be based in the special zone is to be checked and determined by the Xiamen City People's Government.0 These personnel should apply for temporary residence permits.

[Article 11] The non-rotating management executives and technicians sent by the inland party to these associated enterprises may apply for permanent residence in the SEZ and appropriate consideration may also be given to the permanent residence of their family members if the term of cooperation between the two parties is more than five years and the economic performance is good after the first year's business operation.

[Article 12] When the term of cooperation expires or is terminated half-way, assets may be sold freely, funds may be remitted back and the party that sends the employees to the special zone is to be responsible for their reemployment after the associated enterprise has complied with the cancellation procedures as regards its business registration.

[Article 13] The present regulations shall come into force on the date of promulgation.