Favorable Tax Terms For Exportoriented and Hi-Tech Enterprises

Any enterprise with foreign/overseas investment that fulfils the following requirement simultaneously may be confirmed as an export-oriented enterprise:

1.It should be a manufacturing enterprise producing tangible goods for export.

2.Its products are mainly for export (including export by the enterprise itself,or through the agency of a foreign trade company,or in other ways)and the total value of its exports should account for more than 50% of the total output in the current year of production.

3.A balance should be achieved between revenues and expenditrues in foreign exchange,or with a surplus,in the current year of operation.

Any enterpries that meets the following conditions may be confirmed as a technologically advanced enterprise:

1.It belongs,in general,to a trade,or involves itself in a project,encouraged by the State for foreign/overseas investment.

2.The adoption of practical processing technology and equipment of an internationally advanced level and the products so produced could be considered as newly developed in china,or as really advanced in quality and tedhnical performance in comparison with similar or like products manufactured in China.

3.In general,an agreement on technology transfer is signed,or a specific clause for technology transfer included in the equity or contractual joint venture contract,detailing the contents of the transfer,the technical and product standards,the steps for executing the technology transfer,the time limit for attaining the technical and product standards and the progress of the localization of spare parts and components.In case the technology developed by a high-tech development project is truly advanced but no tangible goods are produced,the enterprise may still apply for confirmation and assessment to qualify for the status of technologically advanced enterprise.

After the expiration of the stipulated period of income tax exemption and reduction,export-oriented enterprises whose export products exceed 70% of total output in value in the current year shall pay income tax at a rate of 12%,if located in the urban area,and 10%,if located in the Tianjin Economic and Technological Development Area or the Tianjin Port Free Trade Zone,as the case may be.

For technologically advanced enterprises,the period of 50% reduction can be prolonged for another 3 years after the expiration of the stipulated period for income tax exemption and reduction.