Can foreign-invested enterprises located in Waigaoqiao Free Trade Zone enjoy more preferential policies ?

The enterprises located in Waigaoqiao Free Trade Zone can not only enjoy the preferential policies of the economic and technological zones, Pudong New Area and special economic zones given by the State, but also enjoy the following privileges :

(1) Investment policy

Within the Free Trade Zone, investors can set up Chinese enterprises, wholly foreign owned enterprises and Joint-ventures engaged in manufacturing processing, trading, warehousing, transportation and other service & trading fields.

The enterprises located in the zone can focus on one business and deal in multiple areas. The business scope is relatively flexible.

(2) Administration on import and export of commodities

Enterprises located in the zone don't have to keep a bank margin standing book for processing on order form abroad.

For enterprises engaged in processing within the zone or material circulation, they should keep a record with the Customs and have an overall verification with the Customs.

Enterprises located within the zone are encouraged to be engaged in export processing, processing within the zone is not restricted by lines of business or industrial guidance and not subject to import and export license, manufacturing license or operation license.

The products processed by enterprises located within the zone from imported materials, after approval, can be sold in the domestic market after the duty and other import taxes on the imported material have been paid.

(3) Administration on warehousing

Within the zone any products except those which are prohibited by the State to be imported or exported can be stored without any time limitation, the imported products to be sold in the domestic market can also be stored in the warehouse in the zone.

Commercial processing is allowed in the warehouse, such as sorting , packaging, selecting, sticking trademarks, etc.. The bonded commodities are free to be in and out of the warehouses, can be taken out in whole and deposited in small amount for multiple times or vice versa.

(4) Taxation

The income tax rate of the manufacturing enterprises with the zone is 15%,. those who will be operated over 10 years, starting from the first profit-making year, the income tax of the first year will be exempt, the income tax of the second and the third year will be allowed a 50% reduction

The income tax rate of those non-manufacturing enterprises such as trading or warehousing enterprises in the zone is 15%. Those who will be operated over 10 years, starting from the first profit-making year, the income tax of the first year will be exempt, the income tax of the second and the third year will be allowed a 50% reduction.

Except otherwise stipulated by the State, the commodities imported from abroad to the zone, the entrepot commodities, commodities stored in the zone, the raw material needed by the enterprises within the zone in their manufacturing, machines and equipment for construction purposes in the zone, machines and equipment for enterprise's self use, office equipment in reasonable quantities, fuels, spare components for repair shall be exempt from duty and taxes on import .

(5) Administration on foreign exchange

The administration on the foreign currency income of the enterprises located within the zone will adopt the method of foreign exchange cash, if there is no surplus, the enterprises must handle exchange settle and share. The enterprises can open different accounts according to different kinds of currencies. The normal business expenditure doesn't have to be approved by the administration authorities of foreign exchange , it can be handled according to the contract by the bank with which the enterprise has opened its account .

The enterprises located within the zone can choose a financial institution in the zone to open an ordinary foreign exchange account to handle daily transfer and cash accounting, or to open a special foreign exchange account for specific purposes.

Foreign-invested financial institutions are allowed to set up branches in the zone, foreign currencies are convertible within the zone.

What are the requirements for setting up a foreign-invested holding company?

The applicant in applying for setting up a holding company should conform to the following requirements:

(1)a. The foreign investor should have good credit status and solid financial background for a holding company , with no less than USD400 million of total assets in the previous year. Also, the investor should already have set up foreign-invested enterprises within China whose registered capital should exceed USD10 million, and three projects whose project proposal s have already been approved.
Or: b. The foreign investor should have good credit status and solid financial background for a holding company. The investor has already set up over 10 foreign-invested enterprises engaged in manufacturing or construction of infrastructural utilities, with its actual paid-in registered capital exceeding USD30 million;

(2) If the holding company is a joint venture, the Chinese investor should have a good credit status, with solid financial background and no less than RMB100 million of total assets;

(3)The registered capital of a holding company should be no less than USD 30 million.

What are the regulations on foreign investor's proportion in a Sino-foreign joint venture?

A foreign investor's investment can not be less than 25% of the registered capital in a Sino-foreign joint venture.

What sort of documents and materials shall be presented when an application is made?

When applying for the establishment of a representative office, a foreign or Hongkong, Taiwan and Macau enterprise shall submit the following papers and materials:

(1) The application with the signature of either the Chair of the Board or the General Manager of the enterprise with such details as brief introduction of the enterprise, purpose to set up a representative office, the name of its representative office, names of the chief representative and representatives (if any) and business scope, its duration and its address, etc;

(2) A legal business certificate issued by the competent authorities of the country or region where the applicant is located; (copy)

(3) A letter issued by a financial institution which has business relations with the applicant testifying its financial and credit standing; ( original)

(4) A letter of attorney issued by the Chairman of the Board or the General Manager for the chief representative and representative (if any) of its office and their curriculum vitae and passport copy. If the Chairman of the Board happens to be the chief representative or representative, the letter should be co-signed by at least another two directors. For those enterprises with have no Board of Directors, the letter should be signed by the managing director.

(5) Two application forms;

(6) Other documents the government considers is necessary.

A foreign financial institution or a foreign insurance company or a foreign stock exchange shall submit, in addition to the documents and materials mentioned above, the organisation charter of its general company, the name list of the directors and its latest annual report about its capital, debt, profit and loss.

Can the land-using right be re-transferred?

1)The grantee can re-transfer, collateralize, lease or apply the land-using right to other economic activities legally permitted within the granting period according to the contract and relevant laws and regulations. The grantee shall continue to fulfill the liabilities and responsibilities in the contract after the re-transfer.

2)The on-land buildings, constructions and accessories should be transferred together with the land-using right.