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VI. Projects wanting foreign investment

Textiles, machinery, electronics, salt-chemicals, nonferrous metals, agriculture, communications, energy, and light industries.

VII. Favorable policies for investment

Regulations on encouraging foreign investment promulgated by the People’s Government of Qinghai Province issued in 1998:

Article 1 The provisions are formulated according to relevant stipulations on foreign investment of the state and situations of Qinghai.

Article 2 The provisions shall apply to the projects of Sino-foreign joint venture, Sino-foreign cooperative enterprises, and foreign-owned enterprises within Qinghai. They are also applicable to the investors from Hong Kong, Taiwan, and Macao.

Article 3 Foreign investors can choose the following forms of investment:

1. Sino-foreign joint ventures, Sino-foreign cooperative enterprises, and wholly foreign-owned enterprises;

2. Purchasing, leasing, holding share of, merging, and contacting state-owned and collective enterprises;

3. Compensation trade, material processing, processing supplied samples, assembling with supplied parts, and technology transfer;

4. BOT projects; and

5. Other forms allowed by laws and regulations.

Article 4 Foreign investment is encouraged in the fields of export, advanced technology, agriculture, forestry, animal husbandry, trade, tourism, energy, transportation and approved financial projects. Enterprises for the development and processing of local resources are encouraged.

Article 5 Foreign investment enterprises (FIEs) engaged in export, advanced technology, agriculture, forestry, animal husbandry, trade, tourism, energy, transportation and approved financial projects enjoy a refund of 50 percent of their local income tax from the local revenues. FIEs with an operation period over 10 years and an export volume of half of their output value and the FIEs in the field of advanced technology are exempt from income tax in the first two profit-making years. The FIEs can enjoy the exemption of local income tax, city housing and land tax, and car license tax for ten years. Beyond this period, the FIEs may get approval and continue to enjoy tax exemption and reduction.

Article 6 Ordinary FIEs whose income tax exceeds 24 percent of their income will get the exceeding amount from local financial departments. FIEs with an operation period of over 10 years and an investment of 5 million yuan enjoy the local income tax for three years and have the income tax refunded from the financial departments in the first profit-making year and half refunded in the second and third years.

Article 7 The overdue tax payment in the previous years of the state-owned enterprises, which are merged, share-held, and contracted by FIEs, can be treated in line with Article 6.

Article 8 When the FIEs with an operation period of five years invest their profit for the accumulation of the registration capital or the establishment of a new enterprise in Qinghai, they can have a refund of the business income tax and local income tax for the re-invested part.

Article 9 FIEs enjoy the following land-use policies:

1. FIEs are exempt from the land use fee in the fields of export, advanced technology, agriculture, forestry, animal husbandry, trade, tourism, energy, transportation and approved financial projects.

2. The ordinary FIEs pay half of the land use fee.

3. FIEs using the barren mountains, wilderness, and wasteland enjoy land transfer and use fee exemption.

Article 10 FIEs engaged in mineral exploitation enjoy 70 percent and 50 percent discounts of the mineral exploitation price during the investigation period and commercial exploitation period respectively. Governments at prefecture, county, and township levels are not allowed to push FIEs for cooperation, partnerships, and profit division.

Article 11 FIEs enjoy local administrative fee exemption upon approval.

Article 12 FIEs can settle their own cars in Qinghai. The sedans and motorcycles purchased by FIEs in China are exempt from the local surtax.

Article 13 FIEs are allowed to accelerate the fixed asset depreciation for special reasons with the approval of the concerned taxation bureau upon application from FIEs.

Article 14 FIEs have the decision-making power in operation and management. They can employ the needed managerial and technical personnel and workers in Qinghai and other places of China. As to the personnel from places rather than Qinghai, FIEs can get approval and settle them in Qinghai as needed. FIEs can legally set their product and service price.

Article 15 Relevant departments should give priority to the application of the establishment of FIEs. The examination and approval procedure should be completed within 10 days.

Article 16 No unit or individual is allowed to collect any unjustified fees and fines from FIEs. The administrative institutions can collect fees only with the approval of the price management departments. FIEs have the rights to turn down any fees if not given any relevant notice.

Article 17 Go-betweens of FIEs can be awarded with 0.5-3 percent of actual investment by the beneficiary units. Those who introduce large projects are also awarded by the provincial government.

Article 18 Organizations and relevant government departments solve the complaints of FIEs within seven days.

Article 19 The right of interpretation of these provisions belongs to the Qinghai Merchants Bureau.

Article 20 The provisions shall enter into effect on the date of promulgation. The Preferential Measures of Encouraging Foreign Investment in Qinghai issued on March 1, 1995 is repealed at the same time.

Note: In case of differences of interpretation, the text in the English Language should be considered as the text of reference.

(China Development Gateway December 23, 2009)

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