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VI. Projects wanting foreign investment
Agriculture, energy, transportation, post and telecommunications, communications, urban construction, public health, industrial product processing, tourism, foreign trade, finance, insurance, commerce, and commodity retails.
VII. Favorable policies for foreign investment
After determining the focal point in attracting foreign investment for the year 2000, Xinjiang will take the opportunity in China’s drive to develop its central and western regions and bring into full play of the preferential policies granted by the state. People at the local planning department will pay close attention to the process of negotiations on China’s accession to the World Trade Organization and work out measures to be adopted by the government of the autonomous region after China’s entry into the WTO.
Preferential policies for foreign investment:
Measures of Xinjiang Uygur Autonomous Region to Encourage Foreign Investment (for trial implementation)
Artilce 1: The measures were drawn up especially in accordance with the Law of the Regonal Autonomy of Ethnic Minorities of the People’s Republic of China, A Guiding Catalog of the Industries for Foreign Investment of the People’s Republic of China, other state laws and regulations as well as the specific conditions of the Xinjiang Uygur Autonomous Region, aimed at encouraging investment by foreign businessmen in the autonomous region and protecting their legal rights and interests.
Article 2: The measures apply to enterprises and other projects established with investment by foreign firms, enterprises, and other economic organizations and individuals (herinafter referred to jointly as foreign invested enterprises) in the autonomous region.
Article 3: Foreign investors may adopt the following means of investment according to law:
1). To establish wholly foreign-owned enterprises, joint ventures, and cooperative enterprises.
2). To participate in or hold shares of or purchase, contract to run, or run under lease state-owned, collective-owned, or private-operated enterprises or enterprises with other ownerships.
3). To engage in processing trade items.
4). To engage in building-operating-transfering (BOT) “without recourse” fund-raising projects.
5). To make other modes of investment permitted by the laws, decrees, regulations, and policies.
Article 4: Major industries in which foreign investment is encouraged.
1). The development of agriculture, forestry, animal husbandry and the deep-procesing of their products.
2). The construction of such basic industries and facilities as water conservation, energy sources, and transportation.
3). Textles and light industry: Finish touch and processing of leather products; high-grade simulated chemical fabrics; fabric dyeing, printing, and finish touches; and commercial paper pulp production.
4). Chemical industry: Petrochemicals, agricultural chemicals, and fine chemicals.
5). The prospection and expoitation of metal and non-metal minerals.
6). Building material industry: New-type and energy-saving building materials.
7). New-type industries: New materials, bioengineering technologies, development of energy-saving technologies, technologies for resource regeneration and comprehensive utilization, and environmental pollution control projects and control technologies.
Article 5: Foreign-funded enterprises are entitled to the following preferential tax policies:
1). Foreign-funded enterprises established in the autonomous region with an operation period more than ten years shall be exempt from 3 percent of the local income tax out of the income tax levied on foreign-funded and foreign enterprises.
2). Foreign-funded productive enterprises established in the development zones with approval by the State Council shall be levied the income tax of foreign-funded and foreign enterpries (hereinafter called business tax for short) according to a reduced tax rate of 15 percent. Foreign-funded productive enterprises established in the development zones with approval by the government of the autonomous region shall be levied according to the statutory tarrif. The portion exceeding the stipulated15 percent may be first collected and then returned by the local finance department according to relevant regulations. Foreign-funded enterprises with an operational period more than ten years may enjoy exemption from the business income tax for the first two years beginning with the profit-making year and a reduction of half of the business income tax for the third, fourth and fifth years. The portion of tarrif levied beyond 10 percent on those established in the development zones with approval by the government of the autonomous region may be first collected and then returned by the local finance department according to relevant regutions.
3). Foreign-funded productive enterprises set up in the cities opening to the outisde world (Urumqi, Yining, Tacheng, and Bole) with approval by the State Council shall be entitled to a reduction of the business income tax and levied at a tarrif of 24 percent. Foreign-funded enterprises established in other places of Xinjiang belonging to the categories whose operation is encouraged according to the Measures shall be levied according to the statutory tax rate. The portion exceeding 24 percent shall be first collected and then returned by the local finance department. Those with an operational period more than ten years may enjoy an exemption from the business income tax for the first two profit-making years and a reduction of half of the business income tax for the third through the fifth profit-making year.
4). Foreign-funded enterprises engaged in the development of energy sources (exclusive the exploitation of oil and natural gas) and transportation (exclusive passenger transport) in the cities opening to the outside world (Urumqi, Yining, Tacheng, and Bole) with approval by the State Council shall be levied the business income tax at a rate of 15 percent of their productivity. The portion beyond 15 percent shall be first collected and then returned by the local finance department according to relevant regulations. Those whose operational period is more than ten years may enjoy exemption from the business income tax for the first two years beginning the profit-making year and a reduction of half of the business income tax for the third through the fifth profit-making year. From the sixth to the tenth year, the local finance department shall first collect the business income tax and then return 50 percent of the collected amount according to relevant regulations.
5). Foreign investors of the foreign-funded enterprises who reinvest their share of profits in their enterprises to increase the registered capital or in other new enterprises with an operational period not less than five years may apply for a refund of 40 percent of the paid income tax for the amount of reinvestment, subject to approval by the taxation authority. The remaining 60 percent shall be first collected and then returned by the local finance department according to relevant regulations. The income tax returned to those who withdraw their investment from the enterprises before the five-year-term of operation expires shall be recovered.
A full amount of the business income tax paid for the portion of reinvestment shall be returned to foreign investors reinvesting to set up or expand export-oriented enterprises and technology-advanced enterprises. Enterprises newly established or expanded with reinvestment by foreign investors shall hand back the 60 percent of tax returned to them in case that they fail to meet the criteria set for the export-oriented enterprises or to continue to be identified as technology-advanced enterprises within a period of three years beginning with the year of operation.
6). Foreign-funded enterprises shall be exempt from the license tax for the use of the automobiles and boats and the urban housing and land tax for five years beginning with the month they are in operation.
7). Foreign-funded enterprises engaged in land reclamation to develop agricultural production may enjoy an exemption from the agricultural tax for five years.
Article 6: Foreign-funded enterprises are entitled to the following preferential policies for the use of land:
1). Land may be provided by appopriation for foreign-funded enterprises engaging in the production of agriculture, forestry, and animal husbandry or investing in the development of water conservation, energy, transporation, and other basic facilities. Those engaging in the production of agriculture, forestry, and animal husbandry shall be exempt from the fees for the use of land for five years, and those engaging in the development of water conservation, energy, transportation, and other basic facilities, for ten years. Those who start business on the Gobi, wasteland, or barren mountains unsuitable for neither agriculture, forestry, nor animal husbandry outside the areas planned for urban construction may enjoy an exemption from the land compensatory fees and the fees for land use for 20 years.
2). The term of the right of land use which foreign-funded enterprises obtain by means of transfer shall be no ore than 40 years for commercial purpose, no more than 50 years for industrial production, and no more than 70 years for the erection of residences.
3). Foreign-funded enterprises enjoying the priority of encouragement as stipulated in the Measures shall be entitled to a six-year exemption from the fees for transfering the right to use land beginning with the day they obtain the right of land-use by means of land transfer.
4). Foreign-funded enterprises not given the priority of encouragement in the Measures shall exempt from the fees for transfering the right of land use for four years beginning with the day they obtain the right of land-use by means of land transfer.
5). Foreign-funded enterprises who obtain the right to use land by means of land transfer and have difficulties in making a lump-sum payment of the transfer fees for the right of land-use may be allowed to pay by instalments the said fees within the first three years of operation.
6). Chinese parnters in Sino-foreign joint ventures and cooperative enterprises may covert the land assets into money and then bcome holders of state shares.
7). Foreign-funded enterprises may be allowed to transfer, lease, or mortgage on the land they obtain the right of use by means of land transfer after paying the full amount of the transfer fees according to law, and those which obtain the right of land-use by appropriation may do the same thing according to law after paying the full amount of the transfer fee for the right of land-use.
Article 7: Other preferential policies foreign-funded enterprise are entitled to:
1). Foreign-funded enterprises shall be levied half of the fees for auxiliary urban infrastructure.
2). Foreign staff of foreign-funded exterprises shall be charged at the same rate as to Chinese citiznes when getting accommodations, taking buses, trains, and airplanes or visiting scenic spots in Xinjiang.
3). Foreign-funded enterprises are subject to no restrictions of the institutional purchasing power and shall be exempt from the additional fees for the control of institutional purchasing power when purchasing self-used office and daily-life articles (inclusive automobiles and motorcycles) in China and from abroad.
4). The criteria of fees imposed on the self-used motor vehicles of foreign-funded enterprises shall be the same as that on state-owned motor vehicles in the autonomous region.
5). Foreign-funded enterprises shall be treated in the same way as state-owned enterprises in paying various fees for production and operation.
6). Enterprises established in the autonomous region with businessmen and firms from other places in China shall be entitled to the preferential treatment to foreign-funded enterprises upon approval when the investment by the businessmen and firms from other places in China makes up more than 25 percent of the registered capital of the enterprises.
7). Enterprises established by foreign businessmen entrusting their relatives and friends in China shall be entitled to the preferential treatment to foreign-funded enterprises upon approval when the investment by the foreign businessmen account for more than 25 percent of the registered capital of the enterprises.
8). Intermediary organizations and individuals that introduce foreign investment shall be entitled to a proper bonus by the beneficial Chinese sides according to the actual amount of investment received.
9). Priority shall be given in ensuring the supply of water, electricity, heating, and steam needed in the production and operaton of foreign-funded enterprises and in makaing arrangement for the use of land, the transport of their goods and products, and their import and export quotas.
10). Those engaged in highway projects may carry out land development and service operation related to their projects within a certain area along the highways, subject to approval.
11). Within the scope permitted by the state and autonomous region’s laws, decrees, and regulations, foreign-funded enterprises are entitled to the rights of autonomy as follows: They shall have the right to decide the mode of production, operation, and management as well as the forms of pay districution and the level of pay; to take in and dismiss employees; to set up their internal structures, to hire and discharge responisble members at various levels in the enterprises; and to fix the price of their products.
Article 8: To applications with complete supporting materials for the establishment of foreign-funded projects, the examining and approving authority shall make a positive or negative response within five working days and finish the procedures of examinations and approval their departments are responsible for within ten working days. The department concerned shall submit to the state department concerned applications for projects above the quota and Class-B projects listed in the category whose development is restricted in A Guiding Catalog of Industries for Foreign Investment of the People’s Republic of China within 15 working days. Meanwhile, the work of qualification confirmation of foreign-funded enterprises shall be strengthened.
Article 9: In handling the entry and exit procedures of employees of foreign-funded enterprises, the principle of priority to those who are of the same rank shall be observed.
Article 10: It shall be forbidden to impose indiscriminate quota, unauthorized charges, and unjustified fine on foreign-funded enterprises. It shall be carried out in a strict way The Management Regulations Governing the Imposition of Administrative and Operating Fees in Xinjiang Uygur Autonomous Region and the relevant state policies and regulations in the work involving the adminstrative and operating fees levied on foreign-funded enterprises. The items of fees levied shall be made public and compiled into a uniform fee-collection handbook by the finance and pricing departments of the autonomous region. The department concerned in various places shall collect the abovesaid fees according to what are listed in the handbook. The fee collecting unit shall only perform its duty when it possesses the license issed by Xinjiang Uygur Autonomous Region for the collection of administrative and operating fees and shall draw up a special, uniform fee-collection receipt printed and issued by the Finance Department under the government of Xinjiang Uygur Autonomous Region. All other kinds of receipt are invalid. Foreign-funded enterprises shall have the right to refuse to pay any administrative and operating fees imposed on them in violation of the stipulations in this article.
Article 11: The lawful rights and interests of foreign-funded enterprises are protected by law. No departments and individuals shall be allowed to interfere in the legal operation of the enterprises. In case of infringement of their legal rights and interests, they may make complaint to the people’s governments and departments at various levels or directly submit their cases to the court.
Article 12: Enterprises invested by compatriots from Hong Kong, Macao, and Taiwan and by overseas Chinese shall refer to the Measures unless there are other stipulations in the relevant laws and regulations.
Article 13: The Foreign-Investment Office under the People’s Government of Xinjiang Uygur Autonomous Region is responsible for explaining the Measures and orginazing departments concerned to work out detailed rules and regulations governing the implementation of the Measures.
Article 14: The Measures shall be implemented on the day of promulgation. In case that policies formulated in the past to encourage foreign investment do not conform to the Measures, take the Measures as the guideline.
(China Development Gateway December 23, 2009)