| Incentives to which foreign investors in Shenzhen are exclusively
entitled
In addition to a set of nationally applicable preferences,
foreign investors in Shenzhen enjoy a package of exclusive
incentives:
1. While corporate income
tax stands at 15%, a three percentage of local income tax is also exempted.
2. Export companies at
the expiration of tax exemption and reduction period enjoy
a reduced rate of 10% for income tax provided the export volume
accounts for 70% of the total industrial output. Local enterprises
using state-of-the-art technology at the expiration of tax
exemption and reduction period are entitled to a reduced tax
rate of 10% for a 3-year extension.
3. Foreign invested operations
engaged in high-tech industries are free of income tax for
2 years and enjoy half reduction for the ensuing 8 years.
Having successfully absorbed the related technologies and
started production, the high-tech projects are given3 years
of income tax exemption on the profit hitherto made regardless
of previous tax incentives.
4. The VAT of high-tech
businesses (projects) with foreign investment is computed
against last year's figure and 50% of the local portion of
the newly added VAT shall be returned to the enterprise by
the municipal financial department.
5. Newly-established foreign
invested enterprises with an export orientation need only
pay half of the land use fee for industrial purposes. The
same is true of certified projects involving update technology
for a span of 5 years. As for the land used by high-tech businesses
(projects) no fee is collected from the transfer of land-use
rights.
6. The manufacturing and
operation sites newly built or purchased by high-tech enterprises
are free of property tax for 5 years. Other projects enjoy
a 3-year exemption from property tax.
7. Technological achievements
counted as contribution by companies with limited liability
can take up as large a proportion as 35% of its registered
capital pending certification of high-tech status by the Municipal
Bureau of Science and Technology.
8. Overseas-based Chinese
students and professionals intent on starting technology-intensive
entities in Shenzhen may transcend the residence inadequacies
of the shareholder. Payment of registered capital can take
the form of installments in two years in cases where it fails
to be an once-off placement.
9. Encouraging domestic
and overseas venture investment bodies to make their presence
in Shenzhen. Given local registration and a minimum investment
ratio of 70 percent in the hi-tech sector, such investment
entities are entitled to all the tax holidays and other incentives
enjoyed by the hi-tech firms. A 3 percent to 5 percent of
the year's total profit can be withdrawn as risk compensation
fee to make up for the loss incurred during the previous year
and the current year. The remaining amount of the risk compensation
fee is settled on an annual basis provided the sum does not
exceed 10 percent of the net assets of the company.
10. H-tech companies run
by foreign investors (including those from HK, Macao and Taiwan)
can be registered as domestic-funded ones if their capital
contribution is below 25 percent of the registered capital.
11. Foreign investment
in the local service sector exceeding US$ 5 million with a
business tenure of at least 10 years is entitled to income
tax exemption for the first profit-making year and half reduction
for the second and third years.
12. Foreign banks or sino-foreign
equity joint venture banks in Shenzhen are exempt from business
tax for 5 years commencing on the date of opening.
13. Goods made and sold
locally are free of VAT in the production process.
14. Goods imported by
foreign invested enterprises engaged in export processing
businesses are exempt from import-related VAT and consumption
tax.
15. Processing businesses
undertaken by enterprises or commercial entities with import-export
license and certified qualifications for processing and assembly
operation are free of consumption tax as well as VAT levied
on the industrial fees.
16. Industrial fees derived
from processing businesses by commercial entities for all
types of processing enterprises are free of VAT and consumption
tax.
17. Bonded processing
enterprises with export priority are, upon approval by the
Customs office, permitted to set up bonded factories for processing
trade. Imported facilities for the processing, assembly and
production of export goods for foreign investors are allowed
deferral in going through formalities for import taxation.
Imported materials used for processing finished products for
export enjoy exemption from tariffs and VAT.
18. The foreign business
community in Shenzhen have long had access to national treatment.
In the production of goods not restricted by State quota or
permits, foreign invested entities are free to determine readjust
the market share of domestic and overseas sales according
to actual needs. They have the same standards in paying the
utility bill with their domestic-funded counterparts. Foreign
staffs working and living in Shenzhen enjoy equal service
and are charged at the same rate with local citizens when
it comes to renting or purchasing houses, seeking medical
consultation or visiting scenic attractions. |
