(VIII). For product-exporting enterprises launched by foreign investors, upon the expiry of the enterprise income tax exemptions and reductions enjoyed by them in line with tax laws, should their annual export value account for over 70% of their output that year, they may have their enterprise income tax reduced by half. However, export-oriented enterprises located in special economic zones and economic and technological development zones as well as other enterprises already paying income tax at the rate of 15%, should they conform with the above conditions, they shall be levied the enterprise income tax at the rate of 10%.

(IX). Be technologically-advanced enterprises launched by foreign investors, should they still be technologically-advanced enterprises upon the expiry of the income tax exemption and reduction periods according to laws, may have their enterprise income tax reduced by half for another three years based upon the tax rates as stipulated in tax laws.

(X). Should the foreign partner to an foreign-invested enterprise directly re-invest the profit gained from the enterprise in that enterprise, expand the registered capital or use it to fund the setting up of other foreign-invested enterprises with an over-five-year term of operation, on the application of the investor and with the approval of taxation authorities, shall have 40% of the already paid income tax on the portion used for re-investment refunded; should the foreign investor use its profit derived from the foreign-invested enterprises to launch or expand a product-exporting or technologically-advanced enterprise in China with an over-5-year term of operation, with the verification and approval of taxation authorities, the amount of enterprise income tax already paid on the portion of profit used for re-in-vestment will be refunded.

(XI). If the foreign-invested enterprises have paid the income tax for the part of revenue derived from abroad, the enterprises can be approved to deduct this part of income tax from the total income tax which shall be paid in China; however, the amount of deduction can not exceed the revenue derived from abroad.

(XII). The local income tax of a foreign-invested enterprise shall be calculated based upon the taxable amount of income at the rate of 3% and tax exemption or reduction shall be granted under the following circumstances: (I). Manufacturing foreign-invested enterprises of, during the period of enjoying 2 years of enterprise income tax exemption and 3 years of enterprise income tax reduction by 50%, shall be exempt from the local income tax; (II). Export-oriented and technologically advanced foreign-invested enterprises, during the period of enjoying enterprise income tax reduction by 50%, shall be exempted from the local income tax; (III). Foreign funded enterprises in mountainous counties (districts) shall also be exempted from the local income tax for the time being.

(XIII). If annual loss incurred in the foreign-invested enterprises located in China, the enterprises are permitted to compensate for the loss by using the revenue derived from the next tax year; if it is still not enough, it can compensate for the loss the same way year by year; however, the time limit is five years. For foreign-invested enterprises that incur loss at the initial stage, the year when the enterprise can make profits after they compensate for the losses will be considered the first year of profit making.

(XIV). The profit derived by foreign investors from foreign-invested enterprises shall be exempt from income tax.

(XV). If foreign-invested enterprises invest in the industries under encouraged catalogue and class B of restricted catalogue, purchase domestic equipment within their total investment capital, should the equipment be under the catalogue of tariff-ex-emption equipment, the value-added tax that has been paid by the enterprises should be totally refunded as well as to be taken as credit for enterprise income tax.

(XVI). If the annual increase of the costs for technological development of foreign-invested-enterprises is over 10%, (including 10%), with the approval of the taxation authorities, the enterprises can be approved to deduct the amount 50% of its actual costs used for technological development from its total taxable income of the year. Detailed implementation shall be in accordance with the Administrative Provisions on Deducting Enterprises' Technological Development costs from the Total Taxable Income Before Tax issued by the State Taxation Bureau.

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