Shanghai Free Trade Zone Policies
Preferential Policies
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The only site in the country, where foreign only-owned trade company could be established. |
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In the FTZ, bonded processing, warehousing and displaying may be conducted without time limit; and the bonded products may be bought and sold in the zone freely. |
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All the facilities, construction materials and twenty types of office and utilities used by enterprises themselves in the FTZ are exempted from taxes and licenses. |
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The income tax rate for the FTZ enterprises is 15%; manufacturing enterprises enjoy the policy of "two years exemption and three years half reduction of taxes" since their first profit-making year. Non-manufacturing enterprises enjoy the policy of "one year exemption, two years reduction and 10% levy" since their first operational year. |
Shanghai Waigaoqiao FTZ is the earliest and
most open SEZ by Chinese government. The central government
issued in particular a special legislation (concerning customs,
taxes and foreign exchange, etc.); established special administration
structures to exercise special management upon this area. Its
incentive policies are listed in the following:
Investment Policies:
1. Opening to all the Sino and foreign ventures; permits
the establishment of trade, warehousing and distribution,
processing companies and companies of other service and trade
area, in the form of foreign solely invested, joint venture
and Sino-foreign cooperation. Comprehensive enterprises concerning
all the above fields may also be set up.
2. No matter investing in whichever field in the FTZ, foreign
investors may apply for 100% solely-owned companies, and are
not restrained by the industrial investment orientation of
Chinese government.
Custom Duty Policies
1. All the enterprises invested in the FTZ, all their imported
goods, including mechanical facilities, office utilities (second-hand
goods included) may enjoy 100% duty-free policy (transporting
vehicles are excluded.)
2. The percentage of domestic and overseas sales and custom
tax rate are the same as those of the FTZ.
Bonded Processing of Products
1. When the enterprises in the zone to conduct the businesses
of the processing of materials supplied by buyers or of imported
by materials, they only need to make registration by means
of FTZ brochure. The guarantee deposit system does not apply
to these enterprises; and export products or bonded domestic
transference are exempted from any extra taxes.
2. After the approval of their application, the processing
enterprises in the zone, which have adopted imported and domestic
materials in the processing process, may directly sell their
products on domestic market after having paid taxes on imported
components by the domestic sale percentage approved.
Warehousing of Products
1. Any products (except weapons, drugs and contaminated in
goods) are allowed to be bonded warehousing or displaying
without any time limit and the Customs won't levy any supervision
fees.
2. At the permission of the Customs, the bonded warehouses
in the FTZ may store non-bonded goods at the condition of
segregative management.
3. At the permission of the Customs, the bonded commodities
are allowed to be displayed outside the zone for a short time
after paying the guarantee deposit.
4. For enterprises with good reputation and prestige, at the
approval of the Customs, the bonded components, and the maintenance
parts in their trade, which are in small batch and large sum
and with low price, may adopt the management of "consecutive
going through with one time examination and cancellation".
Tax Policies
1. Enterprises engaged in manufacturing business in the FTZ
enjoy 15% income tax rate. Taxes are exempted in the first
profit making year, and for the second and third year 7.5%,
and 15% for the years latter.
2. Processing VAT are exempted for the export or bonded transference
within the zone for manufacturing enterprises.
3. Profits after tax may be exchanged 100% and remitted overseas,
without any profit remittance taxes.
Foreign Exchange Management
1. Enterprises in the zone may open foreign exchange account
and renminbi account and combine their capital account and
settling account of trade.
2. It's allowed to settle accounts in terms of foreign exchange
or Renminbi between enterprises in the zone and non-FTZ enterprises.
Foreign exchange obtained by FTZ enterprises may 100% deposit
in foreign exchange without abiding by compulsory exchange
system.
3. Implement loose examination and cancellation system on
collection and payment of foreign exchange. For enterprises
with legal operation and good conducts, the sum of exchange
of Renminbi has no restraints.
Functions
Shanghai Waigaoqiao FTZ is the earliest and the largest FTZ
in China. It has formed port industries by the fundamental
truss of manufacturing and processing, free trading, transport
trading, store allocating, ship servicing and service trading.
Among them, industry flowing and storing, manufacturing and
processing, international trading, tax-free commodity exhibiting
are the four most important functions.
Storing and Industry Flowing
Which main conveniences of the FTZ's tax-free storing and
industry flowing function do the investors have?
Every commodities entering into the FTZ can be stored long
with free charge.
Enterprise is allowed to do some such simple processing as
freight classifying, part loading, packing, picking, brand
pasting, and some brushing etc. in the storehouse of the zone
Tax-free commodities can be partly taken by wholly depositing
or wholly taken by partly depositing according to the convenient
of clients.
The business on industry flow allocation for the tax-free
storing function is developing rapidly. The number of companies
who has been ratified to participate in allocation businesses
has amounted to 128 by the end of year 2000.
Manufacturing and processing
There are clearer ascendants and characters than non-tax-free
area when developing business of manufacturing and processing
in Waigaoqiao FTZ.
1. The imports and exports license certificate, manufacturing
and working license certificate are not needed when manufacturing
in the zone
2. All the import materials and machines are tax-free.
3. The manufacturing equipments and office articles for
enterprises' self-use can enjoy tax-free treatment
4. The finished products that have transacted import procedure
can self-sell according the inner-selling rate ratified
by item examining and approving department. Parts of the
components have been adopted, then imposing tax according
to the import materials and machines.
5. Processing enterprises can concurrently do international
trade and tax-free storing businesses.
International Trading
Whether can the trade-type companies that are invested
by foreign traders in the Waigaoqiao FTZ?
The FTZ is, till now the China government has ratified,
the only district that the foreigners can invest (include
singly investing) items on trade-type. The trade companies
in the FTZ can develop:
International trade
Transport trade
Trade and trade advisory service in the zone
Simply manufacturing for business aim
No limits on dealing-type commodities
All these functions are just the functions that are not possessed
by foreign guests investing items in china's non-tax-free
area. It can take foreign trade subrogation when FTZ sells
the commodities to the non-tax-free area.
Tax-free Commodities Exhibition
The pronounced characters of the international commodities
exhibited in the FTZ and non-FTZ lie in:
There are simple procedures when have exhibitions in the FTZ.
The goods exhibited are tax-free and can be stored for long
term (the commodities can be sold by the ratification of customs)
The home and abroad enterprises can control the exhibition
plan by themselves and can exhibit and introduce their new
products and they can do technical showing and training. We
can say that the commodity showing of Waigaoqiao FTZ is "the
undowning international exhibiting party".
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