| REGULATIONS OF THE GUANGZHOU ECONOMIC AND TECHNOLOGICAL DEVELOPMENT ZONE |
REGULATIONS OF THE GUANGZHOU ECONOMIC AND TECHNOLOGICAL DEVELOPMENT ZONE
(Effective Date：1987.01.22--Ineffective Date：)
(Adopted 7 October 1986 at the 22nd Session of the Standing Committee of the 8th Guangzhou Municipal People's Congress and approved 22 January 1987 at the 24th Session of the Standing Committee of the 6th Guangdong Provincial People's Congress.)
CONTENTS
CHAPTER I GENERAL PRINCIPLES
CHAPTER II ADMINISTRATION
CHAPTER III INVESTMENT AND MANAGEMENT
CHAPTER IV TECHNOLOGY IMPORT
CHAPTER V PREFERENTIAL TREATMENT
CHAPTER VI SUPPLEMENTARY PRINCIPLES
CHAPTER I GENERAL PRINCIPLES
Article 1. These Regulations are formulated in accordance with the relevant laws and statutory regulations of the People's Republic of China.
Article 2. The Guangzhou Economic and Technological Development Zone (hereinafter referred to as the Development Zone) shall, subject to the approval of the State Council of the People's Republic of China, be established along the eastern side of the Huangpu District in Guangzhou Municipality.
Article 3. The Development Zone shall be an economic and technological area where the preferential policies of the State are implemented under the leadership of the Guangzhou Municipal People's Government.
Article 4. The Development Zone shall, in accordance with the long-term social and economic development plans of Guangzhou Municipality, carry out economic and technological development, follow the principles of integration of foreign investment with domestic affiliations and assimilation of imported advanced technology and equipment with high level management expertise introduced from abroad, establish production enterprises and scientific research institutions, develop new industries in a planned and systematic way and focus on the development of high technology products, in order to service the structural and technological reform of industries in Guangzhou Municipality and contribute to the development of technology and the economy of China.
Article 5. The Development Zone shall provide investors with a favourable investment environment, good working and living conditions and the necessary public infrastructure, such as land levelling, supply of water and electricity, drainage, environment protection, communications, roads, wharfs, warehouses, schools and hospitals.
Article 6. Assets, due profits and other legitimate rights and interests of an investor in the Development Zone shall be protected by the laws and statutory regulations of the People's Republic of China and by these Regulations.
Any enterprise, public institution or individual in the Development Zone shall abide by the laws and statutory regulations of the People's Republic of China and by these Regulations and shall in no way impair the public interests of society.
Article 7. Employees of an enterprise or a public institution shall have the right, in accordance with the law, to form a trade union organisation to protect their legal rights and interest as employees and to conduct trade union activities.
CHAPTER II ADMINISTRATION
Article 8. An Administrative Commission shall be established in the Development Zone.
The Development Zone Administrative Commission shall, on behalf of the Guangzhou Municipal People's Government, be responsible for the uniform leadership and control of the Development Zone and for the coordination of various Guangzhou Municipal departments and units on matters concerning the Development Zone.
Article 9. The Guangzhou Municipal People's Government shall authorise the Development Zone Administrative Commission to:
(1) formulate and promulgate provisions on the administration of the Development Zone in accordance with the law;
(2) formulate economic and social development plans for the Development Zone and organise their implementation;
(3) examine and approve, within its authorised jurisdiction, the proposed investment projects of investors in the Development Zone;
(4) undertake responsibility for the planning, expropriation, development and management of land within the area of the Development Zone;
(5) manage financial and tax collection matters within the Development Zone and examine and approve applications by enterprises in the Development Zone for a reduction of or exemption from Enterprise Income Tax, Consolidated Industrial and Commercial Tax and other taxes;
(6) supervise, administer and provide guidance to the various types of enterprises and public institutions in the Development Zone;
(7) establish and administer various public services, such as cultural, educational, sporting and health services;
(8) handle foreign related matters in accordance with regulations, and assist in the handling of border exit and entry formalities and other relevant matters;
(9) provide leadership to branch offices established in the Development Zone by various Guangzhou Municipal People's Government departments;
(10) appoint, dismiss or issue awards or penalties to personnel of the organs of or units affiliated with the Administrative Commission;
(11) conciliate in disputes in the Development Zone; and
(12) undertake other functions.
Article 10. The Development Zone may establish necessary functionary organs in accordance with its needs, based on the principle of simple and efficient administration.
CHAPTER III INVESTMENT AND MANAGEMENT
Article 11. Foreign companies, enterprises and other economic organisations or individuals (hereinafter referred to as foreign investors) shall be encouraged to establish production enterprises and scientific research institutions in the Development Zone, and to provide advanced technology and management methods.
Domestic enterprises shall be encouraged to establish in the Development Zone production enterprises which have the capacity to generate foreign exchange earnings and to develop new technological industries.
Article 12. A foreign investor or a domestic enterprise may invest in the Development Zone through:
(1) a Sino-foreign joint equity enterprise;
(2) a Sino-foreign co-operative enterprise;
(3) a foreign investment enterprise;
(4) an independent domestic enterprise or associated enterprise;
(5) compensation trade;
(6) leasing;
(7) purchasing of Development Zone bonds or shares; or
(8) other forms of investment approved by the law of the People's Republic of China.
An enterprise classified under items 1, 2 or 3 of this Article shall hereinafter be referred to as a foreign investment enterprise.
Article 13. Construction of various infrastructure facilities and public utilities in the Development Zone shall be:
(1) developed by the Development Zone independently or in association with a relevant Guangzhou Municipal department;
(2) developed in the form of a joint equity or co-operative project by a Development Zone enterprise in association with a foreign investor or a domestic enterprise;
(3) developed through the contracting of a certain area to a foreign investor or a domestic enterprise.
Article 14. To establish an enterprise in the Development Zone an application shall be submitted to the Development Zone Administrative Commission and, following examination and approval, business may only commence after registering with and receiving a business licence from the Development Zone Administration for Industry and Commerce and after tax registration procedures are completed.
Article 15. A foreign investor shall open an account with the Bank of China or another approved bank in the Development Zone.
The Development Zone Bank of China or another bank designated by the People's Bank of China may service a foreign investment enterprise by providing Renminbi loans mortgaged by foreign exchange.
Foreign enterprises may, under the supervision and administration of the department of the State Administration of Exchange Control, mutually adjust their foreign exchange imbalances.
The various insurance policies required by a foreign investor may be underwritten with the People's Insurance Company of China established in the Development Zone or with another State authorised insurance firm established in another part of China.
Article 16. A foreign investment enterprise shall establish books of account in either the Development Zone or Guangzhou Municipality, conduct independent accounting, submit accounting statements in accordance with regulations and accept supervision by finance and tax organs.
Article 17. A foreign investment enterprise in the Development Zone has the right to decide by itself, within the extent of its approved contract, production and operational plans, the raising and the use of funds, the purchase of production materials, product sales, wage standards, wage forms and bonus and allowances systems.
A foreign investment enterprise in the Development Zone may decide by itself, in accordance with its production and operational requirements, its organisational structure and personnel arrangements, the recruitment or dismissal of its senior management personnel and any increase of the number of or retrenchment of employees.
Article 18. If an enterprise in the Development Zone suspends or terminates its operations, it shall report to the Development Zone Administrative Commission and complete procedures for temporary closure or termination of business accordingly. After tax liabilities and debts have been cleared and procedures for cancellation of the business licence have been carried out with the Development Zone Administration for Industry and Commerce, the assets of the enterprise concerned may be transferred and its foreign exchange may be remitted abroad in accordance with regulations.
CHAPTER IV TECHNOLOGY IMPORT
Article 19. Foreign and domestic enterprises, scientific research institutions, tertiary institutions and engineers and technical personnel shall be encouraged to engage in various forms of technological co-operation in the Development Zone.
Article 20. Technology imported into the Development Zone shall be of an appropriate and advanced nature, including patented technology, technology awaiting patent approval, proprietary technology and technology which is of clear economic benefit.
Article 21. The Development Zone shall focus on the import of the following new technology:
(1) technology relevant to new industries and products which are development priorities of Guangzhou Municipality or China;
(2) technology which will have a marked effect on the technological renovation and updating of products of existing enterprises in Guangzhou Municipality or China;
(3) technology which produces products which can be used to develop export markets or as a substitute for import products;
(4) production and manufacturing technology which is particularly needed in China;
(5) technology required for a specific industry or product of Guangzhou or another part of China, in order for it to catch up with advanced international standards.
Article 22. The Development Zone at its outset shall import appropriate technology which requires limited investment, has a short recovery period and a quick return, and which produces products which can be exported to generate foreign exchange earnings. This shall be done in order to improve the transformation of traditional products in Guangzhou Municipality and to improve the level of scientific management of enterprises in Guangzhou Municipality.
Article 23. foreign and domestic production enterprises and scientific research institutions shall be encouraged to engage in combined production-scientific research in the Development Zone and shall enjoy preferential treatment regarding such aspects as site selection, factory establishment, credit loans and taxation.
Article 24. Technology may be imported in the following forms:
(1) licensing trade;
(2) technological co-operation;
(3) co-operative production or co-operative production research;
(4) hiring of experts;
(5) import of technological materials; or
(6) other.
Article 25. An investor in the Development Zone shall be permitted to establish a joint equity or co-operative enterprise by using technology as capital investment.
In normal circumstances the technology share of capital shall not exceed 20% of the registered capital of the joint equity enterprise or co-operative enterprise. Investment of cash or kind equal to more than the value of the share of technology in capital shall also be required. Capital investment of technology in an enterprise confirmed by the Administrative Commission as being technologically advanced shall not exceed 30% of the registered capital of the enterprise and where investment of technology exceeds 20%, cash or investment in kind shall not be less than 20% of the registered capital of the enterprise.
Article 26. The Development Zone shall establish a scientific and technological development fund for the import, development, absorption and assimilation of high technology.
CHAPTER V PREFERENTIAL TREATMENT
Article 27. The Development Zone shall reduce to 15% Enterprise Income Tax on income from production, business operations and other income of production enterprises with foreign investment in the Development Zone. Where the operational period of such an enterprise is 10 years or more, an application may be made by the enterprise to the Development Zone taxation authority for exemption from Enterprise Income Tax for two years from the first profit-making year, and for a reduction of Enterprise Income Tax at one half of the prevailing rate in the third to the fifth year.
Article 28. The Development Zone Administrative Commission shall decide whether a Development Zone enterprise is entitled to preferential treatment in the form of a reduction of or exemption from local income tax.
Article 29. A foreign investor shall be exempt from payment of income tax on dividends remitted abroad, provided that Enterprise Income Tax has been paid.
Article 30. In addition to those parties exempt from income tax as provided by the law, a foreign investor that has no establishment in china and that receives income such as dividends, interest, rental or royalties from the Development Zone, shall have income tax levied at a reduced rate of 10%. If the terms for the funds or equipment provided are favourable and the assigned technology is of an advanced standard, the granting of further reductions or exemptions from income tax shall be determined by the Development Zone Administrative Commission.
Article 31. A Development Zone enterprise shall be exempt from Customs duty and Consolidated Industrial and Commercial Tax on building materials, production equipment, raw materials, assembly parts, components, means of transport, and office equipment which are imported for the enterprise's own use. If, however, products processed from duty free raw materials, assembly parts and components are sold domestically, retroactive payment of Customs duty and Consolidated Industrial and Commercial Tax on the imports used shall be carried out in accordance with regulations.
Article 32. Export products manufactured by an enterprise in the Development Zone may be exempt from Consolidated Industrial and Commercial Tax, except for those which are State restricted exports. Products sold domestically shall be subject to tax levies in accordance with regulations.
Article 33. Daily necessities and means of transport imported for personal use by a foreign national, Overseas Chinese or Hong Kong, Macao or Taiwan compatriot working for an enterprise in the Development Zone or residing in the Development Zone shall be exempt from Customs duty and Consolidated Industrial and Commercial Tax, provided the amount of goods is of a reasonable quantity.
Article 34. A production enterprise with foreign investment which faces difficulties in paying Consolidated Industrial and Commercial Tax during the first 3 years after start up of operations may, after approval by the Development Zone taxation authority, pay a reduced amount of or be exempt from Consolidated Industrial and Commercial Tax.
Article 35. If a foreign investor reinvests its after-tax dividends in the enterprise or in another enterprise in the Development Zone for more than five years, 40% of the amount of Enterprise Income Tax already paid on the reinvested dividends may be refunded and, if the amount is reinvested in the establishment or expansion of an exporting enterprise or a technologically advanced enterprise, the full amount of Enterprise Income Tax paid on the reinvested dividends may be refunded. If such reinvestment is withdrawn in less than five years, the amount of refunded Enterprise Income Tax shall be returned.
Article 36. An enterprise in the Development Zone which uses domestically produced machinery, raw materials or other goods produced in China may calculate its accounts in foreign exchange at the export commodity price for equivalent Chinese goods.
Article 37. A foreign investment enterprise in the Development Zone which is confirmed by the Development Zone Administration Commission as an exporting enterprise or a technologically advanced enterprise may enjoy the specific preferential treatment stipulated in the provisions of the State Council Regulations concerning the Encouragement of Foreign Investment and of Guangdong Province and Guangzhou Municipality.
Article 38. A domestic joint affiliation production enterprise in the Development Zone which involves investment by an enterprise under the jurisdiction of Guangzhou Municipality may, following application to and approval by the Development Zone taxation authority, pay Enterprise Income Tax at a reduced rate of 15%.
During the five year period after its first profit-making year, an enterprise such as that mentioned in the previous paragraph may be exempt from payment of the local supplementary income tax and adjustment tax payments at the place where the enterprise is located if the enterprise's after-tax profit derived from the Development Zone is used in the Development Zone to expand production or to establish an export-oriented industry. If such profit is remitted to an urban or suburban area of Guangzhou Municipality or a surrounding county, income tax differentials may be exempt, but 10% of the income tax differential shall be submitted to the local financial department in the district or county.
CHAPTER VI SUPPLEMENTARY PRINCIPLES
Article 39. These Regulations shall also apply to enterprises in the Development Zone invested in and operated by an Overseas Chinese, Hong Kong, Macao or Taiwanese company, enterprise, other economic organisation orindividual.
Article 40. These Regulations shall take effect on the date of promulgation and the Provisional Regulations of the Guangzhou Economic and Technological Development Zone, promulgated on 9 April 1985 by the Guangzhou Municipal People's Government, shall be nullified at the same time.
Article 41. The right to interpret these Regulations shall reside with the Standing Committee of the Guangzhou Municipal People's Congress.
|
|