May 16th 1998
Every district and county government, every department of Wuhan Municipal Government:
For the purpose of improving the investment environment and attracting more foreign investment to Wuhan, and also improving the quality of using the foreign fund, we stimulated the following regulations for encouraging the foreign investment.
I. Encourage the foreign investment in infrastructure sector of the city.
1. For joint ventures invested in sector of energy, transportation and harbor, the income tax rate will be reduced to 15%. If the operation period of those enterprises is above 15 years, after the approval of the local taxation authority, the charged income tax can be refunded to the enterprises in the first five profit making years and half of the charged tax will be returned back in the second five profit making year.
If the foreign enterprises reinvest their profit get from the above mentioned operation to the infrastructure project, and the operation period is no less than 5 years, after the approval of the tax authorities, 40% of the charged income tax can be refunded to the enterprises.
2. For the newly approved foreign invested enterprises invested in the sector of energy, transportation and harbor, the charged vehicle transportation fee and other operation tax will be refunded to the enterprise in a certain proportion within the investment return period of the enterprises after the approval of the local tax authorities.
3. The foreign invested enterprises invested in infrastructure project can make an application to set up the related comprehensive operation project along the road of the infrastructure project or at the indicated area. The enterprises can enjoy the basic land price.
4. We encourage the foreign investor to purchase share or operation right of certain period of the completed or being built infrastructure facilities such as energy, transportation and harbor. The foreign investor can enjoy the preferential tax policies if they can purchase more than 25% of the total share of the project.
II. Encourage the foreign investment in restructure of the state owned enterprises
1. Foreign investment is permitted in the restructure of state owned enterprises in the form of share transferring, leasing, purchasing, entrusting and contracting.
2. The foreign invested old state manufacturing enterprise is free of the administrative fee charging.
3. If the Chinese part of the foreign invested state owned enterprise used the land as the investment, less than 70% of the land transferring fee will be refunded to the enterprise as the reinvest of the state assets.
4. If the foreign investor merges and purchases the state enterprise that has a deficit for three years, through the approval of bank, can enjoy the exemption of interest of the original loan of the state enterprise. And through the approval of tax authorities, it can have the refund of the land added value tax.
5. If the foreign investor leased the plant, equipment and other infrastructure facilities of the state owned enterprise, it can enjoy the refund of the operation tax of the old enterprise.
6. If the foreign investor transferred the old plant located in the urban area to suburb area, 70% of land transferring fee will be refunded to Chinese part as the reinvest of the state assets.
III. Encourage the foreign investment to Wuhan Economic Development Zone and East Lake High-tech Development Zone (zones in following)
1. For the foreign invested enterprises located in the zones, after the approval of the tax authorities, can enjoy a refund of the local income tax for ten years from the first profit making year.
2. The foreign invested enterprises in the zones will enjoy the preferential policies of the development zones.
3. The foreign invested enterprises in the zones can enjoy the exemption of the administrative fee of municipal level excluding the land fee.
IV. Encourage the foreign investment in high-tech enterprises and exporting enterprises.
1. The foreign investment in the form of technology transferring can reach 35% of the total register capital.
2. The equipment used for developing and producing the high-tech products in foreign invested enterprise can depreciated fast after the approval of the taxation and finance authorities, and the depreciation charge will be given to the enterprise for renovation.
3. When the legal tax reduction of the foreign invested high-tech enterprise whose operation period is above 10 years is finished, can be reduced the income tax for another three years. If the income tax is less than 10% after the reduction, it will be charged as 10%.
4. The foreign invested high-tech and exporting enterprise can enjoy the half reduction of the land transferring fee (excluding the cost of the land).
V. Encourage the foreign investment in agriculture and tertiary industry.
1. For the joint ventures invested in the project of agriculture, forest, husbandry and aquatic, and the charged income tax can be wholly returned back to the enterprises in the first five profit making years and half of the charged tax will be returned back in the second five profit making years.
2. For the foreign enterprises invested in comprehensive agricultural development and export oriented agriculture, can enjoy the wholly refund of resource tax, slaughtering tax, agricultural tax and special agricultural products tax. It can also enjoy the exemption of land using fee for 5 to 10 year.
3. If the property owner transfer the deserted land to foreign investor for 10 years, and the foreign investor has not invested 25% of the total investment in 3 years without special reasons, the owner can take the land back.
4. Through the permission of the authority, the foreign enterprises can enjoy the exemption of the import tax for seed and seedlings.
5. Loosing the restriction on using the foreign investment of tertiary industry such as tourism, advertisement, accounting and law services, transportation agent, commercial commodity inspection, investment item evaluation, etc.
VI. Encouraging the investment of transnational companies.
1. The transnational company can setup an investing company in Wuhan according to the regulation, if it has already setup more than 3 foreign invested manufacture and infrastructure construction enterprises in China and the investment is above 30 million USD.
2. After invested more than 3 enterprises in Wuhan, the transnational company can setup a group company and use the name of “Group Co.” after the approval of the local authorities.
3. The transnational company can be bigger shareholder of the joint venture or setup a wholly foreign owned enterprise when investing in infrastructure project such as transportation and energy, unless there is the special regulation of the central government.
4. The transnational company invested in large and medium sized items, technology and capital-intensive items and advanced agricultural items can enjoy the preferential policies on price of the land using.
VII. Deeply improve the investment soft environment.
1. To provide the foreign investor a completed set of services from application to approval through the setting up of Wuhan Foreign Investment United Service Center by arranging the different government departments working together.
2. The Wuhan Foreign Investment United Service Center will provide the needed documents and guidance for the approval of the foreign invested items to the foreign investors at one time and established a pre and final approval system.
3. We have inspected all the fees that charged form foreign invested enterprises. Besides tax, the entire administrative fee will be charged in the United Service Center since June 1999.
4. The foreign invested enterprises can decided themselves the proportion of the products sold in domestic or export, unless there is the special regulation of central government.
5. The supply of water, electricity, gas, transportation and telecom needed by the foreign invested enterprises will be guaranteed first in the similar condition compared to domestic enterprises. The price will be the same and can be paid in RMB.
6. The foreign invested enterprises and foreign employees will enjoy the same treatment as Chinese enterprises and employees in charging road and bridge maintaining fee, housing managing fee, tourism and medical fee.
7. Wuhan Foreign Investment Office is responsible for the interpretation of the regulation.
8. The regulation will come into force on the date of promulgation, the similar regulations formulated before are abolished.
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