Major Policies on Promoting the Development of Tiexi Industrial Region in Shenyang, China

(June 19, 2002)

　　To implement the decision of Shenyang Municipal Party Committee on merging the leading bodies of Tiexi District and Shenyang Economic and Technological Development Zone and to accelerate the renovation of the old industrial zone in Tiexi District and the construction of National Base of Advanced Equipment Manufacture, following policies are formulated for the new administration:

　　1. Power of Administrative Management. The merged administrative body is authorized with the management power of municipal level.

　　2. Power of Land Management. Land Reserve Center is approved to be established and authorized with the power of the management of land within the jurisdiction, including approval of land transfer under land supply planning of the city and put on file in municipal Planning and Land Resource Bureau, and collection and allocation of land transfer fee and auxiliary fee. The fund needed for urban construction and management in the jurisdiction area will be raised by the merged administration.

　　3. Power of Fiscal Management. The fiscal policy of Shenyang Economic and Technological Development Zone remains unchanged. For Tiexi District, the fiscal base quota of year 2001 will be maintained and all the increment will be kept by the District.

　　4. Power of Planning Management. The merged administration is authorized with the planning management power equivalent that of Shenyang Economic and Technological Development Zone.

　　5. Social Security. National and provincial policies and quotas on integration of re-employment of laid-off and unemployment workers and bankruptcy of state-owned enterprises shall be implemented favoring Tiexi District.

　　6. Management of municipality-owned Enterprises. The management of all the municipality-owned enterprises in Tiexi District will be transferred to the new administration except for a few enterprise groups.

　　7. All the enterprises registered in Shenyang Economic and Technological Development Zone enjoy concerned policies for national economic and technological development zone. Incentive policies for national economic development zone include:

　(1) For production-oriented foreign invested enterprises, the enterprise income tax shall be levied at a reduced rate of 15%. After the approval of tax authorities, the FIEs whose operational period is more than 10 years shall be exempted from the enterprise income tax for the first and second profit-making year and allowed a 50% reduction from the third to fifth year.

　(2) For export-oriented enterprises set up by foreign investors, whose value of exported products reaches or surpasses 70% of the total production in a tax year, in the wake of the expiration of the legal term for reduction and exemption, the enterprise income tax shall be levied at a reduced rate of 10%. For high-tech enterprises owned by foreign investors, the enterprise income tax can be levied at a reduced rate of 10% for another three-year period following the termination of the legal term for reduction and exemption.

　(3) For export-oriented enterprises and high-tech enterprises, local income tax shall be exempted. For other FIEs, from the first tax-paying year, local income tax shall be exempted from the first to the fifth year and allowed a 50% reduction for the following 3 years.

　(4) Foreign investors who reinvest directly its share of profit obtained from the enterprise in that enterprise or other enterprises in the Development Zone, who are scheduled to operate for no less than 5 years can be refunded 40% of the income tax paid on the reinvested amount. For foreign investors who reinvest foe establishment or expansion of export-oriented or high-tech enterprises, the full amount of the income tax paid on the reinvested amount can be refunded if the enterprise is scheduled to operate in China for no less than 5 years.

　(5) For FIEs suffering annual loss, income of next tax year can be used to make up foe the income tax, if the income of next tax year is insufficient to make up for the tax due, the income of the year after that can be used, and so on. However, this should not go beyond 5 years.

　(6) For foreign investors who have no offices in China, a reduced income tax of 10% shall be levied on their dividends, interests, rents, franchise and other incomes derived from the Development Zone except those exempt from income tax according to law. After approval, FIEs providing funds or equipment or transferring advanced technologies shall be exempted of enterprise income tax.

　(7) If a foreign investor is to transfer his share of profit after tax outside China, the income tax of the transferred amount shall be exempted.

　(8) For FIEs using semi-finished products or materials of Chinese origin and carrying out substantial processing, if the finished products achieve 20% value increase and are for export, these products are deemed as export products of the FIEs and the tariff shall be exempted.

　(9) When calculating sales tax of value-added tax for the export products manufactured by FIEs and the tariff shall be exempted.

　(10) After approval, FIEs engaging in infrastructure construction projects in the area of transportation, energy, communications and so on, whose scheduled operation period is over 15 years, shall enjoy more favorable treatment than production enterprises in terms of enterprise income tax.

　(11) For FIEs requisitioning land in Development Zone, if the transfer fee of land use right can be paid odd in full within 3 months, FIEs shall enjoy reductions on the fee.