II. Exemption or Reduction of Tariff, Value-added Tax, Consumption Tax and Business Tax
(I). Since January 1, 1998, projects listed in the Encouraged Entries of the State Industrial Catalogue Guiding Foreign Investment (Jointly promulgated by the SDPC, SETC and MOFTEC and revised in March 11, 2002) as well as all the permitted projects exporting all products, can have their imports of equipment from import tariffs and import stage VAT, on condition that the imports are within the investment volume, for the projects own use and are not included in the Catalogue for Imports not Exempted from Tax in Foreign Funded Projects. The imports for the own use of the projects financed by foreign government loans and international financial organizations and imported equipment which are not evaluated by foreign investors of processing trade shall be exempt from import tariffs and import stage VAT in accordance with the Provisions of Tariffs-Free Import Equipment for Foreign Investment Projects, i.e., imports not included in the Catalogue for Imports not Exempted from Tax in Foreign Funded Projects, For the above mentioned projects, techniques, auxiliary equipment and spare parts imported according to the contract together with the equipment shall be exempt from import tariffs and import stage VAT.

(II). The Sine-foreign equity joint venture banks or foreign banks set up in special economic zones, starting from the date of operation, shall be exempt from the business tax for 5 years.

(III). The agro-based produce sold by the foreign-invested enterprises engaged in animal and plant cultivation, forestry, animal husbandry and aquatic industry shall be exempt from the value-added tax.

(IV). Processing and assembling goods for export and the related processing cost shall be exempt from the value-added tax and the consumption tax.

(V). For export products from compensation trade projects, should the value-added tax have been charged in the production stage, tax rebates shall be granted after such goods have cleared the customs. For export goods under compensation trade, tax rebates shall be granted without presenting certificates of export exchange earnings receipt.

(VI). For the already established "encouraged" foreign-in-vested enterprises, foreign-invested R & D centers, technologi-cally-advanced and product-exporting foreign-invested enterprises, during their technological transformation, if they import self-use equipment and related technologies, components and parts, which are within the original approved business scope and which can not be produced domestically or the functions of local products can not meet their needs, such imports shall be exempt from tariffs and import stage taxes.

(VII). When foreign-invested R & D centers import self-use equipment and related technologies, components and parts within their investment volume, which cannot be produced domestically or the functions of local products cannot meet their needs; such imports shall be exempt from tariffs and import stage taxes. Their income from technology transfer will be exempt from business tax under the same conditions as the domestic enterprises.

(VIII). For foreign enterprises transferring technologies to the enterprises within China, if the technologies are advanced or the terms of conditions are favorable, with the approval of the tax authorities of the State Council, they can be exempt from business tax and enterprise income tax. Foreign-invested enterprises are exempt from business tax on the income from the technology transfer.
 

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