According to the relevant state and provincial regulations, foreign investors will enjoy the following preferential policies when they invest in Dongguan City, Guangdong Province, PRC.
I. Exemption or Reduction of Enterprise Income Tax

The income tax of foreign invested enterprises is 30%.

(I). The income tax of the following foreign invested enterprises shall be levied at the rate of 15%:

1. Foreign-invested enterprises located in special economic zones and foreign invested enterprises located in economic and technological development zones;

2. With the approval of the State Taxation Bureau (STB), foreign-funded enterprises located in the old sections of the cities which are called coastal open areas, special economic zones and economic and technological development zones, projects falling into the category of technology-intensive and knowledge-intensive projects, or projects with over US$30 million of foreign investment and the cycle of investment return in long, or projects of energy, transportation and harbor construction;

3. Sino-foreign joint ventures engaged in the construction of harbor and berth;

4. Such financial institutions as foreign funded banks and Sino-foreign equity banks set up in special economic zones and other areas approved by the State Council, with the minimum requirement being that foreign investors' financial inputs or the operating funds injected by the head office of a bank to the branch exceeds USS10 million and the term of operation exceeds 10 years;

5. Foreign Invested enterprises deemed to be high-tech and new-tech enterprises located in areas determined to be high and new tech development zones by the State Council;

6. The foreign invested enterprises located in the free Trade Zones that are engaged in the processing of export-oriented products.

(II). Since Guangdong Province can enjoy the preferential policy granted to the coastal economic open areas, all the foreign-invested enterprises in the province (except the above-mentioned enterprises) will enjoy a 24% enterprise income tax

(III). For Foreign-invested enterprises with over-10-year-term of operation, starting from the first year of profit making, their income tax for the first year and the second year shall be exempted and that for the third to fifth year shall be slashed by 50%.

(IV). For foreign-invested enterprises engaged in agriculture, forestry and animal husbandry and those located in economically underdeveloped remote and border areas, upon the expiry of the tax exemptions and reductions enjoyed by them in accordance with the above-mentioned provisions, on the application of such enterprises and with the approval of the State Council, their income tax may continue to be slashed by 15% to 30% in the ensuing 10 years.

(V). For Sino-foreign equity joint ventures with an over-15-year term of operation engaged in the construction of harbors and ports, on the application of such enterprises and with the approval of provincial taxation authorities, starting from the year of profit-making, their enterprise income tax from the first to fifth year shall be exempted and their enterprise income tax from the sixth to the tenth year shall be slashed by half.

(VI). For foreign-invested enterprises engaged in the service sector established in special economic zones, should their foreign investment exceeds USS 5 million and their term of operation exceeds 10 years, on the application of such enterprises and with the approval of the taxation authorities in the special economic zones, starting from the year of profit-making, their enterprise income tax for the first year shall be exempted and that for the second and third years shall be slashed by half.

(VII). For such financial institutions as foreign banks and Sino-foreign equity banks set up in special economic zones and other areas approved by the State Council, should the financial inputs of foreign investors or the operating funds injected by the head office of a bank to the branch exceed USS10 million and their term of operation surpasses 10 years, on the application of such businesses and with the approval of local taxation authorities, starting from the year of profit-making, their income tax for the first year shall be exempted and that for the second and third years shall be slashed by half.

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