Encouraging Investment in Pudong Provisions

Encouraging Investment in Pudong Provisions

Order of the Shanghai Municipal People's Government [1990] No.35

September 10, 1990
　
Article 1 These Provisions are formulated in accordance with the decision of the State Council to develop and open up Pudong, and in accordance with relevant State laws and regulations, in order to better attract investment by foreign businesses and to accelerate the construction of the Pudong new Area of Shanghai (hereafter, the "New Area")
　
Article 2 Foreign companies, enterprises and other economic organizations or individuals (hereafter referred to as "foreign investors") are encouraged to establish the following types of Sino-foreign equity joint ventures, Sino-foreign co-operative joint ventures and wholly foreign-owned enterprises (hereafter, "foreign investment enterprises"), and shall be granted preferential treatment:
1. Production-oriented foreign investment enterprises, especially export-oriented enterprises, especially export-oriented enterprises and advanced-technology enterprise;
2. Foreign investment enterprises that, in accordance with the consolidated plan of the New Area, invest in the development of, and conduct business on, large tracts of land, in conjunction with other projects on such land; and
3. Foreign investment enterprises that engage in construction projects for [the development of energy resources] and communications.
　
Article 3 Foreign investors shall be allowed to invest in and establish tertiary industries in the New Area. However, where foreigners invest in or establish enterprises such as financial enterprises and commercial retail enterprises, a report must be submitted to the State Council for approval.
　
Article 4 A bonded zone shall be established in the New Area. Subject to the approval of the competent department of the State Council, foreign investors shall be permitted to establish trade organizations in the bonded zone to engage in entrepot trade or to act as the agents of foreign investment enterprises in the zone for importing raw materials and spare parts used in their production for exporting their products.
　
Article 5 Where production-oriented foreign investment enterprises obtain income from production, business operations or other sources, the Enterprise Income Tax on such income shall be levied at the reduced rate of 15 per cent. Upon applying to and receiving approval from the tax authorities, such enterprises with a term of operation of not less than 10 years shall, commencing from their first profitable year, be exempt from Enterprise Income Tax for the first and second years and enjoy a 50 per cent reduction in Enterprise Income Tax for the third through fifth years.
Upon the expiration of the period of Enterprise Income Tax exemptions and reductions provided for in State regulations, export-oriented enterprises the value of whose export products in any given year reaches 70 per cent or more of the total value of the enterprise's products in that year may pay Enterprise Income Tax at the reduced rate of 10 per cent.
　　......