Tax Preferences for Foreign Investment in Chengdu

Authors: Go Chengdu

2014-05-20

Preferential Policies Tax Preferences
Other Tax Preferences
1, For manufacturing foreign capital enterprises, house duty and vehicle & ship license tax shall be exempted for the first 10 years. For non-manufacturing foreign capital enterprises, house duty and vehicle & ship license tax shall be exempted for the first 3 years.
2, For foreign capital enterprises which make investment in comprehensive development and utilization of agriculture, refined processing of subsidiary agricultural products, forstry development, resources development for comprehensive utilization, energy construction and energy saving, traffic infrastructure construction, technology upgrades of medium and large-sized state-owned enterprises, advanced technology, products export, municipal infrastructure construction, protection against environment pollution, ecological environment protection, tourism development, and senior or secondry vocational education projects, house duty and vehicle & ship license tax shall be exempted within the operation period.
3, For foreign capital enterprises that use waste mountains, wasteland, and waster river beach for agricultural technology development projects, agricultural tax shall be exempted for the first 5 years starting from the income-earning year.
4, For foreign capital enterprises that develop taxable agricultural specialties in waste mountains, land, waste river beach and waste water, agricultural tax shall be exempted for the first 3 years starting from the income-earning year.
5, If foreign-funded research and development center transfers technologies, business tax shall be exempted according to policies applicable to domestic science research institutions.
6, For foreign capital enterprises that need to shorten the depreciation period of fixed assets due to special reasons, fixed assets accelerated depreciation can be applied upon approval by State Administration of Taxation.
7, Foreign capital enterprises shall be exempted from city maintenance and construction tax.
8, Foreign capital enterprises shall be exempted from extra charges of education funds for the time being.
9, If foreign capital enterprises purchase home equipment, they shall be entitled to duty drawback preferential policy according to the Proposed Regulations on Tax Drawback Administration Regarding Foreign Capital Enterprises’ Purchase of Home Equipment.
Local Income Tax Preferences
1, Manufacturing foreign capital enterprises shall be exempted from local income tax. Non-manufacturing foreign capital enterprises that are planned to operate over 10 years shall be exempted from local income tax for the first 5 years starting from the profitable year. For those that are planned to operate less than 10 years, local income tax shall be exempted for the first 3years.
2, If the foreign investors make investments in establishing high and new tech enterprises, export-oriented enterprises, enterprises that undertake infrastructure projects such as highway, energy, water conservancy, civil and public facilities, and enterprises that are engaged in the development of agriculture, forestry, stockbreeding and fishery, local income tax shall be exempted.
Preferential Policies Land Use Policies
1, If the land use conforms to overall planning of land use, the foreign capital enterprises shall enjoy priority in using construction land.
2, Foreign capital enterprises shall been encouraged to obtain land use right by means of remise, leasehold, evaluated investment, or equity participation. Should the foreign capital enterprises obtain land use right by means of remise, field use fee and state land use tax shall be exempted.
3, Should the foreign capital enterprises obtain land use right by means of transfer, the following preferential policies shall be applicable to the field use fee:
3.1 For high and new tech enterprises and export enterprises, if they use the original field, the field use fee shall be exempted for the first 3 years starting from the day the enterprises commence the operation. The use fee shall be reduced by half starting from the fourth year. If the operation period of the enterprises exceeds 10 years, the field use fee shall be exempted for the first 6 years. And the fee shall be reduced by half starting from the 7th years. For enterprises that develop the field themselves or by commitment the field use fee shall be exempted for the first 5 years starting from the day the enterprises start the operation. The use fee shall be reduced by half starting from the sixth year. If the operation period of enterprises exceeds 10 years, the field use fee shall be exempted for the first 7 years. And the fee shall be reduced by half starting from the eighth year.
   3.2 Field use fee shall be exempted for foreign capital enterprises which are engaged in public welfare undertaking, state-supported key non-profit projects including science and technology, education power station, high way, bridge, tap water plant (exclusive of urban pipe network), water conservancy etc.
   3.3 Foreign enterprises engaged in the development and operation of agriculture, forestry, stockbreeding and fishery, the field use fee shall be exempted for the first 5 years starting from the day the enterprises obtain the land use right. The fee shall be reduced by half starting from the sixth year.
   3.4 Should the field be used for mineral resources survey, the field use fee shall be exempted if the use period is 6 months or less. If the use period exceeds 6 months, the filed use fee shall be reduced by half.
   3.5 Foreign capital enterprises shall pay field use fee starting from the day when the production commences. Should the period be longer than half year but shorter than one year, the fee shall be collected based on a half-year basis. Should the period be shorter than half year, the fee is exempted.
   3.6 Foreign capital enterprises’ field use fee shall be collected by city (or county) land administrative authority of the located place.
4, Should the foreign investors make investment in grafting and renovation project of the industrial enterprises and high and new tech projects that conform to the industrial policies of Chengdu and require large amount of investment, special preferential land policies shall be applicable. Regulations on Preferential Policies Encouraging Foreign Investment of Chengdu Municipal Government (brief)
Preferential Policies Business Income Tax Preferences
1, For manufacturing foreign capital enterprises, the tax rate for business income tax shall be reduced to 24%. For foreign capital enterprises that are located in the Chengdu National Economic and Technological Development Zone or Chengdu High-tech Industrial Development Zone (inclusive of Chengdu National Cross-Straits Technology Industrial Development Park) and recognized as high and new technology manufacturing enterprises, the tax rate for business income tax shall be reduced to 15%.
2, If the foreign investors make investment in manufacturing projects that are encouraged by state industrial policies, the tax rate for business income tax shall be reduced to 15% within 3 years after the current tax preferences period.
3, Foreign capital enterprises that are located in Chengdu High-tech Industrial Development Zone (inclusive of Chengdu National Cross-Straits Technology Industrial Development Park) or Chengdu National Economic and Technological Development Zone, which pay business income tax at a reduced rate of 15% and whose line operation period exceeds 10 years, business income tax shall be exempted within the first two years starting from the profitable year, and the tax rate shall be reduced 10% from the 3th year to the 5th years.
4, Foreign capital enterprises which are engaged in technology or knowledge-intensive projects, or which make an investment over USD30 million and have a long payoff period, or which are engaged in manufacturing for energy and transportation projects, shall pay business income tax at a reduced rate of 15% upon approval byrelevant tax authority.
5, For manufacturing foreign capital enterprises whose line operation period exceeds 10 years, business income tax shall be exempted for the first two years starting from the profitable year, and the tax rate shall be reduced by half from the third year to the fifth year.
6, After the tax preferences period, the state-stipulated business income tax for foreign capital export enterprises shall be reduced by half if their production value of export products for the current year exceeds 70% of the total production value. For export enterprises that pay business income tax at a rate of 15% according to relevant state regulations, the tax rate shall be reduced to 10% if they meet the afore-mentioned conditions.
7, For foreign capital bank, Sino-foreign joint venture bank, etc. that are located in Chengdu, if the invested capital or working capital transferred from the head bank to the branch bank exceeds USD10 million and the operation period exceeds 10 years, business income tax rate shall be reduced to 15% upon approval by relevant tax authority. And the business income tax shall be exempted for the first year starting from the profitable year, and the tax rate shall be reduced by half from the second year to the third years.
8, If the foreign investors of foreign capital enterprises use the profit obtained from the enterprises as additional share or invest it to establish new foreign capital enterprises which are planned to run at least 5 years 40% of the paid business income tax for the re-invested value shall be refunded to the investors upon approval by tax authority. If the new enterprises are engaged in high and new technology, or infrastructure projects such as highway, energy, water conservancy, civil and public facilities, or the development of agriculture, forestry, stockbreeding and fishery, and the operation period is at least 5 years ,the paid business income tax for the re-invested value shall be fully refunded to the investors.
9, For foreign companies, enterprises and other economic organizations which have no office or branch in Chengdu but earn income interest on capital, interest on money, charter hire, chartered right use fee and others, the income tax rate shall be reduced to 10%.
10, If foreign capital enterprises make an increase in the expenses of technology development by 10% or more compared with previous year, upon approval by tax authority, 50% of the actual expenses of technology development shall be counted as paid business income tax for the current year in accordance with Administrative Methods on Pretax Deduction for Enterprises Technology Development Expenses formulated by the State Revenue Bureau. Regulations on Preferential Policies Encouraging Foreign Investment of Chengdu Municipal Government (brief)
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