These rules are formulated with a view to fully implementing the Provisions of the State Council on Encouraging Foreign Investment.

1. These provisions are applicable to Sino-foreign joint ventures, Sino-foreign cooperative enterprises and wholly foreign-funded enterprises (hereinafter referred to as foreign invested enterprises) within Beijing.

2. Project proposals from Sino-foreign joint ventures and Sino-foreign cooperative projects within the power of examination and the approval of Beijing shall be reported to the Municipal Planning Commission for examination and approval after getting examined and approved by the competent municipal bureaus (hereinafter referred to as the competent bureau), and their duplicates shall be presented to the Municipal Economic and Trade Commission and the competent commission office under the municipal government (hereinafter referred to as the competent commission office). The Municipal Planning Commission shall obtain approval from the Municipal Economic and Trade Commission and the competent commission office before executing examination and approval.

Feasibility study reports of technical transformation projects approved by and filed with the Municipal Planning Commission shall be submitted by the competent bureau to the competent commission office, and their duplicates shall be presented to the Municipal Planning Commission and the Municipal Economic and Trade Commission. The competent commission office will give official approval after consulting with the Municipal Economic and Trade Commission and the Municipal Planning Commission; capital construction projects shall be submitted to the Municipal Planning Commission for approval and their duplicates shall be presented to the Municipal Economic and Trade Commission and competent commission office.

If the total investment volume of feasibility study reports exceeds approved projects by 20%, or contents of capital construction projects undergo great changes, the competent commission office, coupled with the Municipal Planning Commission and the Municipal Economic and Trade Commission, must re-examine them and grant official approval.

3. If districts and counties carry out Sino-foreign joint ventures, Sino-foreign cooperative projects pursuant to the following conditions, projects proposals and feasibility study reports thereof are subject to examination and approval of district and county governments.

(1) Non-restrictive projects (directories of non-restrictive projects will be notified separately) with total investment volume below US$ one million (including US$ one million);

(2) Scales of newly built, expanded construction are within the power of examination and approval of districts and counties and in line with urban construction plan;

(3) Those that can handle funds, energy resources, raw material supply and balance of foreign exchange by themselves.

Districts and counties shall consult with the Municipal Planning Commission, the Municipal Economic and Trade Commission and competent commission office before executing examination and approval. Approved project’s proposals and feasibility study reports thereof, shall be submitted to the above-stated commissions and office or be filed with the competent bureau.

4. If bureaus, subordinate to Beijing Municipality, carry out Sino-foreign joint ventures and Sino-foreign cooperative projects, pursuant to Article 3 of these provisions and having nothing to do with floor space, the municipal competent bureau is empowered to examine and approve their projects proposals and feasibility study reports after obtaining approval from the Municipal Planning Commission, the Municipal Economic and Trade Commission and competent commission office. Approved project’s proposals and feasibility study reports shall be filed with the above-stated commissions and office which are considered for granting approval if objections are not raised within 15 days as of the day of the receipt of filed documents.

5. The Municipal Economic and Trade Commission is responsible for examining and approving (or submitting to the Ministry of Foreign Trade and Economic Cooperation) agreements, contracts and articles of foreign invested enterprises and granting approval certificates.

6. Overseas business trip application reports of employees working for foreign invested enterprises, after obtaining approval and signature from leaders of governments at district and county level and of competent bureaus, may be directly submitted to the Municipal Economic and Trade Commission which will present them to the municipal government for approval. Those who do require frequent overseas business trips may be issued multi-round-trip visas at approval of the municipal government.

7. The competent departments at all levels shall strengthen coordination of their work and improve efficiency in handling matters according to their work divisions and power limits, and shall decide to approve or not within one month from the date of receipt of documents such as projects proposals, feasibility study reports, agreements, contract and articles etc.

8. Chinese partners invest in foreign invested enterprises by converting plant building, facilities and the right to the use of sites, into shares or by self-financing. They may apply to the state, the competent municipal financial departments or the competent departments for financial allocation to make up insufficient sections, and they may also apply to the Bank of China Beijing Branch or other specialized banks for loans. If export-oriented enterprises and technologically-advanced enterprises do have financial difficulties, they may get loans from outside China at the approval of the People’s Bank of China. Enterprises getting loans are responsible for debt-servicing.

Chinese parties’ fixed assets’ scales, credit quotas and working capital credit loans in foreign invested enterprises are listed in special plans of the annual plans of national economy by the Municipal Planning Commission and other related departments. Capital quotas of unplanned projects shall be solved by the Municipal Planning Commission and specialized banks in light of actual situations.

9. Foreign invested enterprises may adjust balance of foreign exchange among themselves under the supervision of the Municipal Administration of Foreign Exchange. The Bank of China Beijing Branch and other specialized banks approved by the People’s Bank of China conduct foreign exchange mortgage businesses for foreign invested enterprises.

10. Foreign invested enterprises are permitted in part or as a whole to settle in foreign exchange at the approval of the Municipal Administration of Foreign Exchange, if they accept production orders that can not be manufactured at home and need import. Domestic enterprises and units, when providing commodities and services etc., cannot charge foreign exchange over foreign invested enterprises unless approved by the Municipal Administration of Foreign Exchange.

11. If foreign invested enterprises manufacture products restricted by the state for import, sections of the products for internal sales shall be listed by competent departments in charge of enterprises, in plans according to internal sales ratios prescribed in cooperative enterprises contracts, be arranged by the Municipal Planning Commission in a unified way, and be reported to the State Economic Commission for examination and approval.

12. Foreign invested enterprises, when manufacturing products which the city needs importing, can practice import substitution at the approval of the Municipal Economic Commission on the conditions that the products’ quality, specifications, performance, price and date of delivery are guaranteed.

13. When foreign invested enterprises manufacture products of import substitute, imported spare parts, accessory and repairs, components and parts, auxiliary equipment and raw materials are monitored by the Beijing customs as bonded goods. If domestic users are imposed, at a reduced rate of, or exempt from, import duties when importing products of these kinds, foreign invested enterprises enjoy similar duties exemption or reduction treatment on imported materials and components and parts when selling products of import substitute to domestic users.

14. Export products operated by foreign invested enterprises, in accordance with sales agreements or export contracts, after obtaining approval from competent departments on a yearly basis, are considered being listed in export plans or having acquired export quotas, and shall be granted export licenses by the Municipal Economic and Trade Commission.

If foreign trade corporations, engaging in import and export activities, export products by means of overseas sales channels of foreign invested enterprises, their export quotas of export plans shall be solved from the plans and quotas of these corporations.

15. If foreign invested enterprises fulfill, or over fulfill, foreign exchange earning plans through exports, and settle their foreign exchange in the Bank of China Beijing Branch, Beijing Municipality will grant them honorary and material reward.

16. Materials needed by foreign invested enterprise for construction or production and operation are annually drawn up in plans and fit into material supply plans of competent bureaus according to actual needs of enterprises and approved production plans. They are required to be reported respectively to the Municipal Materials Bureau and other related competent departments or the State Bureau of Materials for solution.

17. The Municipal Materials Bureau, construction material corporations, coal corporations, petrol corporations and other material supply departments shall supply materials to foreign invested enterprises at prices equivalent to state-owned enterprises. Foreign invested materials & facilities supply corporations shall be established to act as agencies conducting import facilities, raw materials, components and parts and other businesses for foreign invested enterprises.

18. Competent departments in charge of enterprises are responsible for integrating and coordinating the supply of water, electric power, gas, energy resources and communication facilities needed by export-oriented enterprises and technologically-advanced enterprises. If they have difficulties in integrating, the Municipal Economic Commission, the Municipal Public Utilities Bureau, the Power Supply Bureau, the Telecommunication Bureau and other related departments are responsible for making overall arrangements, verifying quotas and granting preferential supply according to approved feasibility study reports. These enterprises shall enjoy the same treatment as domestic enterprises, of its kind, on the supply price and charges.

19. If Chinese partners invest with plant buildings, sites, facilities, loans and self-possessed funds, their profits, with the exception of the parts used for repaying investment loans, shall be left at the disposal of Chinese side investors and Chinese employees working for foreign invested enterprises within five years from the year they begin to gain profits. Among them, 80% of the profits shall be left to Chinese side investors and 20% to Chinese employees working for foreign invested enterprises. Profits thereafter shall be handed over to the state according to the ratio verified by municipal financial departments and competent departments, the rest shall be distributed according to the above-stated measures.

20. Export-oriented enterprises and technologically-advanced enterprises are not required to hand over various allowances granted to Chinese employees by the state, except that they shall pay employees’ salaries, retaining funds for labor insurance, medical care, welfare expenses and housing allowances. Other foreign invested enterprises shall hand over various allowances granted by the state at 60 yuan each month for each person, 30 yuan of it for housing allowance. They are exempt from handing over housing allowance for those employees who have their own houses (1986, 1987 standard). They are exempt from handing over grain, oil, non-staple food allowances for employees with rural residence. Foreign invested enterprises located in outlying counties shall hand over various allowances granted by the state to financial departments at district and county level.

21. Export-oriented enterprises and technologically-advanced enterprises, on the recommendation of the Municipal Commission of Foreign Trade and Economic Cooperation and at the approval of the Municipal Taxation Bureau, enjoy exemption from, and reduction of, local income tax and income tax generated by foreign investors remitting profits out of China. Other foreign invested enterprises are exempt from local income tax on conditions that their annual turnover volumes are below one million yuan (including one million yuan) and their sales (operating) profits rates are below 20 % (including 20%).

22. Export-oriented enterprises and technologically-advanced enterprises, on the recommendation of the Municipal Commission of Foreign Trade and Economic Cooperation and at the approval of the Municipal Real Estate Administrative Bureau, enjoy exemption from, or reduction of, land use fees. With the exception of busy sectors of the city, land use fees of other areas are collected at 5-20 yuan per square meter each year. In the areas where land use fees are collected on a one-time basis or where above-mentioned enterprises develop lands by themselves, land use fees for one square meter each year cannot exceed 3 yuan and may be exempt or reduced for a certain period in light of actual situations. Foreign invested enterprises located in districts and counties shall be levied land use fees by their districts and counties they are located in. Land use fees collected at municipal, district and county level shall be utilized for infrastructure construction.

23. If export-oriented enterprises and technologically-advanced enterprises manufacture products for internal sales and have difficulties in paying taxes at the beginning of their starts-up, and if they file applications, they may enjoy exemption from, or reduction of, industrial and commercial consolidated tax, at the approval of the taxation authorities. If foreign invested enterprises manufacture products for export, with the exception of crude oil, patent oil and other products specified otherwise by the state, they may be exempt from industrial and commercial consolidated tax.

24. All districts and counties, related departments and units shall strengthen guidance and supervision over Sino-foreign cooperative enterprises by helping enterprises with actual problems and strictly executing the Notice of the State Council on Firmly Prohibiting Unjustified Financial Levies on Enterprises.

Foreign invested enterprises are empowered to refuse any unreasonable charges that infringe provisions of government, and may file complaints to the Municipal Economic and Trade Commission and up to the State Economic Commission.

25. Competent departments in charge of enterprises shall send excellent personnel to work in foreign invested enterprises. Boards of directors of enterprises are empowered to recruit and dismiss employees according to law in light of actual needs of enterprises. The Municipal Personnel Bureau and the Municipal Labor Bureau shall provide foreign invested enterprises with good services.

26. The Municipal Commission of Foreign Trade and Economic Cooperation, coupled with related departments, is responsible for verifying export-oriented enterprises and technologically-advanced enterprises according to related state provisions and verification measures of the Ministry of Foreign Trade and Economic Cooperation and issuing them certificates.

27. Corporations, enterprises and other economic organizations or enterprises started by individuals from Hong Kong, Macao and Taiwan shall refer to these provisions.

28. With the exception of clauses that are clearly stated to be applicable to export-oriented enterprises and technologically-advanced enterprises, other clauses in these provisions are applicable to all foreign invested enterprises.

29. These provisions are applicable, as of the date of the implementation of these provisions, to the foreign invested enterprises whose establishment has been approved prior to the implementation of these provisions and that are in line with preferential treatments specified in these provisions.

30. These provisions, coupled with the Regulations of the State Council on Encouraging Foreign Investment, shall enter into force as of Oct 11, 1986.

Regulations of Beijing Municipality Concerning Foreign Investment in Developing and Managing Real Estate (Full Text)

Article 1 In compliance with related laws and regulations and taking the particular conditions of Beijing into consideration, these provisions are hereby formulated with a view to introducing funds, developing real estate, expediting urban construction and promoting economic development.

Article 2 All foreign enterprises, other organizations and individual investors (hereinafter referred to as investors) are entitled, pursuant to these provisions, to engage in development and operation of real estate in the following fields within administrative areas of the city:

(1) science, industry, agriculture, transportation;

(2) tourism, commerce, finance, entertainment, sports;

(3) high-grade residence, office buildings.

These provisions are also applicable to enterprises, other organizations, individuals and overseas Chinese from Hong Kong, Macao and Taiwan.

Article 3 The term “real estate” used in these provisions refers to the right to the use of state-owned urban land (hereinafter referred to as the right to the use of the land) and buildings thereof on the ground and other attachments.

The term “real estate operation” used in these provisions refers to economic activities such as transfer, lease, mortgage of the right to the use of the land, and buying and selling, lease, mortgage of buildings such as houses and other attachments.

Article 4 In developing and operating real estate, investors must strictly observe Chinese law, rules and regulations, and development enterprises, established by investors, are eligible for autonomy in operational activities within the framework of law and contracts.

Lawful rights and interests of investors are protected by law.

Article 5 In developing and operating real estate, investors shall, in compliance with the provisions of the Law of the People’s Republic of China on Joint Ventures with Chinese and Foreign Investment, the Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures and the Law of the People’s Republic of China on Foreign-Capital Enterprises, establish joint ventures, cooperative enterprises and wholly foreign-funded enterprises (the said three kinds of enterprises are shortened as development enterprises).

Joint ventures, cooperative development enterprises co-founded by local enterprises, other organizations and investors, must obtain the eligibility for real estate development and operation.

Investors intending to establish wholly foreign-funded enterprises to develop tracts of land for real estate, and joint ventures, cooperative enterprises or wholly foreign-funded enterprises intending to engage in business activities in the form of real estate, must obtain approval from the municipal government and must report to competent departments of the State Council for approval.

Article 6 Development enterprise engaging in real estate development and operation shall obtain the right to the use of the land pursuant to the Provisional Regulations of the People’s Republic of China on Lease and Transfer of the Right to the Use of State-owned Urban Land (hereinafter referred to as Regulations) and the Implementation Measures of Beijing Municipality on the Provisional Regulations of the People’s Republic of China on Lease and Transfer of the Right to the Use of State-owned Urban Land(hereinafter referred to as Implementation Measures).

As regards lands whose use rights have been drafted to be transferred, the House and Land Administrative Bureau shall issue a notification at the approval of the municipal government, and provide corresponding information to anticipated assignee according to Article 14 of Implementation Measures.

Article 7 Development enterprises may sell, lease real estate to enterprises, other organizations and individuals, both inside and outside China. Nevertheless, they are subject to the ratification of Beijing Municipality if selling houses to individuals inside China (with the exception of Hong Kong, Macao, Taiwan).

In selling and leasing real estate, both parties shall conclude relevant contracts and go through transfer registration of house property rights and of the right to the use of the land according to provisions specified in Regulations and Implementation Measures. Sales of high-grade residence building requires conclusion of the convention on house use, management and maintenance, and shall be reported to the House and Land Administrative Bureau for approval.

Article 8 Houses can be sold as a whole or by floor and set. Where houses are sold by floor and set, contracts shall clearly prescribe percentages and remaining years’ limits of the right to the use of the land pertaining to the houses. Time limit of house lease shall fall in line with that of expiration of the right to the use of the land.

House sales’ prices are at the disposal of development enterprises.

Article 9 House sales in advance must meet the following requirements and obtain the approval of the House and Land Administrative Bureau:

(1) paying off land price charges and acquiring land use licenses;

(2) construction designs having been ratified and having acquired construction projects planning licenses;

(3) having completed more than 25% of total investment volume of projects construction;

(4) construction progress plans and date of delivery having been determined.

After houses are sold in advance and are delivered and come into use, house buyers shall go through houses’ property rights and the right to the use of the land registration as required.

Article 10 Real estate sales and lease can be executed both inside and outside China. Chinese law shall be applied in such cases outside China.

Real estate sales and lease shall, as specified, go through notarization and identification.

Article 11 Development enterprises may use real estates in their possession as a mortgage to banks or other financial institutions both inside and outside China, and sign a contract for going through the mortgage registration as prescribed in Regulations and Implementation Measures.

When pledgers set the leased houses as a mortgage, they shall notify lessees in written form and the original lease contracts continue to be valid.

Article 12 In developing and operating real estate, development enterprises shall pay taxes as specified by law.

With the exception of charges, and items listed by the state and municipality, development enterprises are entitled to deny any other tax levies.

Article 13 Development enterprises shall maintain the balance of foreign exchange receipts and payments on their own. Yuan earnings of their operational profits are at the disposal of investors in accordance with related regulations.

Article 14 Local enterprises and other organizations intending to jointly engage in economic activities with investors, by using allocated rights to the use of the land, buildings on the ground, and other attachments, must file applications for approval and pay overdue land premiums as prescribed in Regulations and Implementation Measures.

Article 15 These provisions are subject to interpretations of Beijing Municipality.

Article 16 These provisions shall come into force as of the date of promulgation.

Rules of Beijing Municipality on Collection of Charges of Land Use over Foreign Invested Enterprises (1997 Revision) (Full Text)

Article 1 These provisions are formulated in accordance with the Law of the People’s Republic of China on Sino-Foreign Joint Ventures and other related regulations and based on the actual conditions of Beijing.

Article 2 With the exception of those who lawfully acquire the transferred right to the use of the land, anyone intending to use lands within administrative areas of the city (including collectively-owned land) to start Sino-foreign joint ventures, Sino-foreign cooperative enterprises, wholly foreign-funded enterprises (hereinafter referred to as foreign invested enterprises) shall be levied land use fees according to these provisions.

The term “land use fees” used in these provisions refers to land use fees handed over by foreign invested enterprises to local government during their operational period, excluding fees utilized for land requisition, removal and infrastructure construction.

Article 3 Upon lawfully obtaining approval for land use, foreign invested enterprises must sign land use contracts with the Municipal House and Land Administrative Bureau; financial bureaus at municipal, district and county level (hereinafter referred to as financial departments) shall collect land use fees over foreign invested enterprises according to contracted land areas and land grades.

Article 4 Land use fees remain unchanged within five years as of the day of ratification; and will be subject to re-ratification in light of actual situations after the expiration of five years.

Article 5 Foreign invested enterprises shall hand over land use fees on a yearly basis according to the Gregorian calendar. Land use fees shall be collected on a quarterly basis and settled at the end of each year. In the case of land use time in the first year exceeding half a year, land use fees shall be collected on a half-a-year basis; in the case of less than half a year, land use fees shall be exempt.

Article 6 During the contracted preparatory construction period (including capital construction period, the same as below) foreign invested enterprises shall hand over 20% of land use fees according to ratified standard.

Production-oriented enterprises can be exempt from land use fees within the prescribed preparatory construction period at the approval of the Municipal Financial Bureau.

Article 7 For enterprises established by overseas Chinese, Taiwan compatriots, with ratification certificates issued by Municipal Overseas Chinese Affairs Office and Taiwan Affairs Office and at approval of financial departments, land use fees may be reduced by 20% to 30% according to the prescribed standards.

Article 8 For export-oriented enterprises and technologically-advanced enterprises, up to standard after examination and at the approval of the Municipal Financial Bureau, land use fees may be reduced by 20% to 30% according to the prescribed standards.

Article 9 As regards land use for planting and aquaculture, land use fees shall be collected in light of the standard for industrial land use.

Article 10 If foreign invested enterprises do have difficulties in paying land use fees, they are eligible for suspended collection at the approval of the Municipal Financial Bureau.

Foreign invested enterprises applying for reduced payment of, or exemption from, land use fees, shall submit reports to the municipal government for approval after verified by the Municipal Financial Bureau.

Article 11 If Chinese parties of foreign invested enterprises utilize the right to the use of the land as investment, Chinese parties shall hand over land use fees.

Article 12 If foreign invested enterprises lawfully lease land or houses for business operation, lessees or the parties specified in lease contracts shall hand over land use fees.

Article 13 Penalties shall be levied by financial departments on foreign invested enterprises or Chinese side investors violating these provisions pursuant to the Provisions of the State Council concerning Penalties on Violating Financial Laws and Regulations.

Article 14 This standard for the collection of land use fees over foreign invested enterprises is drafted by the Municipal Financial Bureau, the Municipal Price Bureau and the Municipal House and Land Administrative Bureau and shall be reported to the municipal government for approval.

Article 15 The Municipal Financial Bureau is responsible for interpreting problems arising from actual execution of these provisions.

Article 16 These provisions shall come into force as of Oct 1, 1992. The Provisional Regulations of Beijing Municipality on Collection of Charges of Land Use over Sino-foreign Joint Ventures promulgated by Beijing Municipality on May 17, 1985 shall be declared null and void then.

Provisional Regulations of Beijing Municipality on Encouraging Foreign Businessmen to Invest in Yizhuang Industrial Development Zone (Full Text)

Article 1 These provisions are hereby formulated, pursuant to related laws and regulations, with a view to encouraging investment from foreign businessmen and promoting the construction and development of Yizhuang Industrial Development Zone.

Article 2 Foreign enterprises and other economic organizations or individuals (hereinafter referred to as foreign businessmen) are encouraged to establish in Yizhuang Industrial Development Zone (hereinafter referred to as The Industrial Zone) Sino-foreign joint ventures, Sino-foreign cooperative enterprises and wholly foreign-funded enterprises (hereinafter shortened as foreign invested enterprises). Enterprises carrying out the following investment projects are granted preferential policies according to these provisions.

(1) export-oriented enterprises and technologically-advanced enterprises verified according to related provisions of the Ministry of Foreign Economic Relations and Trade (hereinafter shortened as export-oriented enterprises and technologically-advanced enterprises); production-oriented enterprises in compliance with related industry guidance policies for foreign invested projects (hereinafter shortened as productive enterprises).

(2) high-tech enterprises verified by State New and High-tech Industrial Development Zone High-tech Enterprises Verification Conditions and Measures approved by the State Council and set forth by the State Science and Technological Commission, and verified by the Provisional Regulations of Beijing New and High-tech Industrial Development Trial Zone concerning High-tech Enterprises Verification (hereinafter shortened as high-tech enterprises).

Article 3 From the year becoming profitable, production-oriented enterprises with operational periods of over ten years, at approval of the taxation authorities, are exempt from corporate income tax for the first and second lucrative years and are levied corporate income tax with 50% reduced for the third to fifth years.

Article 4 Export-oriented enterprises, at expiration of tax exemption and reduction from corporate income according to law, may pay corporate income tax at a reduced rate of 50% at the approval of the taxation authorities when its production value of exported products in the year accounts for 70% of the total production value of products of the very year. Export-oriented enterprises which have already paid corporate income tax at the rate of 15% may hand over corporate income tax at the reduced rate of 10% if falling in line with the above conditions.

Article 5 Technologically-advanced enterprises, at expiration of tax exemption and reduction from corporate income according to law, may pay corporate income tax at a reduced rate of 50% for another three years at the approval of the taxation authorities when they are re-verified as technologically-advanced enterprises.

Article 6 Where foreign invested enterprises are technology-intensive, knowledge-intensive projects or where projects with foreign investment over US$30 million and a long term of investment retrieval, and the approval of taxation authorities, allowed a corporate income tax levy at a reduced rate of 15%.

Article 7 High-tech enterprises, with verification of the Municipal Science and Technological Commission, according to law, may pay corporate income tax at a reduced rate of 15%, and are exempt from corporate income tax for three years as of their establishment. High-tech enterprises, at the approval of the taxation authorities, may pay corporate income tax at a reduced rate of 7.5% for the forth to sixth year. At exemption of tax exemption and reduction from corporate income, corporate income tax may be levied at a reduced rate of 10% on the approval of the taxation authorities when their production value of exported products in the year accounts for 40% (not including 40%) of the total production value of the year.

Article 8 Production-oriented enterprises may be exempt from corporate income tax at the approval of the Municipal Taxation Bureau.

Article 9 Foreign investor from export-oriented enterprises and technologically-advanced enterprises are exempt from income tax on the remittance when they remit profits of their enterprise outside of China.

Article 10 Foreign investor from foreign invested enterprises are refunded 40% of their already paid corporate income tax at the approval of the taxation authorities if they reinvest the profits of the enterprise directly on the same enterprise or start new enterprises in the Industrial Zone with an operational period of no less than 5 years. Foreign investors from foreign invested enterprises are refunded with all of their already paid corporate income tax at the approval of the taxation authorities if they invest in export-oriented enterprises or technologically-advanced enterprises with operational period no less than 5 years.

Article 11 Foreign invested enterprises may be exempt from import duties, and export-related industrial and commercial consolidated tax, if they use part of the total investment volume to import, for their own production use, machinery and equipment, components and parts and materials (including material intended for re-starting plants and fixing machinery and equipment), transportation vehicles, office equipment as well as articles and transportation vehicles(at an appropriate number) for personal use by foreign professionals.

Article 12 Raw materials, fuels, spare parts, components and parts, auxiliary equipment, supplementary materials, packing materials (hereinafter shortened as materials and parts) imported by foreign invested enterprises, for performing contract of product export, shall be monitored by customs as bonded goods and may be exempt from import license.

The parts of imported materials and parts consumed during the course of processing for export may be exempt from import duties and export-related industrial and commercial consolidated tax.

If products, processed out of imported duty-free materials and parts, obtain the approval for internal sales, foreign invested enterprises shall pay overdue duties for original imported duty-free materials and parts to customs and export-related industrial and commercial consolidated tax within one month as of the day of the approval, and apply for import licenses in the case of commodities which are required to obtain license.

Article 13 If foreign invested enterprises manufacture substitute import products, imported materials and parts shall be monitored by customs as bonded goods. If domestic users enjoy exemption and reduction from import duties when they directly import products of the same kind from outside China, foreign invested enterprises shall similarly enjoy preferential treatment of exemption and reduction from import duties for imported materials and parts if they sell their substitute import products to them.

Article 14 Foreign invested enterprises may be exempt from export duties if they export products, which shall be levied export duties, with the exception of the products, whose export is restricted by the state.

Article 15 Foreign invested enterprises manufacturing products for internal sales may be exempt from industrial and commercial consolidated tax for a certain period of time when they have difficulties in paying tax at the beginning of their starts-up, provided that they file for application and obtain the approval from taxation authorities. Foreign invested enterprises manufacturing products for export may be exempt from industrial and commercial consolidated tax, with the exception of crude oil, patent oil and other products otherwise prescribed by the state.

Article 16 For foreign employees, overseas Chinese, Hong Kong and Macao compatriots and Taiwan compatriots working for foreign invested enterprises, income taxes may be levied at a reduced rate of 50%.

Article 17 Production-oriented foreign invested enterprises may be exempt from land use fees during the contracted preparatory construction period at the approval of financial departments.

Article 18 General municipal administration fees and “Four Resources Expenses” that shall be paid by foreign invested enterprises in the Industrial Zone shall be handed over to the government by the Industrial Zone in a unified way.

Article 19 Substitute import products manufactured by foreign invested enterprises ratified by competent departments of the State Council or competent departments of the municipality are permitted to be computed as a whole, or in part, at foreign exchange when sold inside China.

Article 20 Foreign invested enterprises may adjust balance of foreign exchange through the Foreign Exchange Adjustment Center pursuant to related regulations.

Article 21 Foreign invested enterprises may apply to the Bank of China or other specialized banks, Bank of Communications and trust and investment institutions handling foreign exchange business for foreign exchange loans and loans in yuan; may apply to the Bank of China Beijing Branch for loans in yuan with their own foreign exchange as mortgage; may issue bonds, both inside and outside enterprises, at the approval of the People’s Bank Beijing Branch to solve the problem of shortage of funds in the course of production and development.

Article 22 If Chinese side employees from Sino-foreign joint ventures and Sino-foreign cooperative enterprise need to go abroad for business activities, such as business negotiations, purchases, marketing, after-sale services and technological development, they may, after obtaining approval and signature from leaders of original competent departments, directly file their applications to the Industrial Zone Management Commission which, coupled with the Municipal Economic and Trade Commission, is empowered to approve; for those who need frequent overseas business trips within one year, they may go through their procedures pursuant to Detailed Rules of Beijing Municipality concerning Simplifying Frequent Going-abroad Ratification Procedures for Chinese Employees from Sino-foreign Joint Ventures and Cooperative Enterprises; if Chinese employees from wholly foreign-funded enterprises need overseas business trips, they may apply to the Municipal Public Security Bureau for passports.

Article 23 Foreign investors, at the approval of competent departments of Beijing municipality, may invest, by developing tracts of land and engaging in real estate operation according to unified planning in the Industrial Zone, and may also establish matching service facilities for the Industrial Zone. They are encouraged to bring projects and engage in infrastructure and plant buildings construction on tracts of land.

Article 24 At the approval of customs, bonded storehouses, bonded factories may be built in the Industrial Zone in order to facilitate production of enterprises and meet the requirements of import and export businesses.

Article 25 Enterprises and other economic organizations or individuals from Hong Kong, Macao, Taiwan intending to invest in The Industrial Zone may refer to these provisions and other related state stipulations.

Article 26 Other incentive policies encouraging foreign investment and failing to be specified in these provisions can be executed, pursuant to related state and municipal laws, rules and regulations.

Article 27 Beijing Yizhuang Industrial Zone Management Commission is responsible for interpreting these provisions; problems concerning domestic taxation are subject to interpretations of taxation authorities; problems concerning taxation and monitoring on imported and exported commodities, articles are subject to the interpretations of customs.

Article 28 These provisions shall come into force as of June 1, 1992.