Taxation Policies

Currently, the tax varieties applicable to foreign-invested enterprises and foreign individuals (including those from Hong Kong, Macao and Taiwan) include income taxes, intermediate taxes (including value-added tax, consumption tax and business tax), resource tax, property tax, and import duties, etc.  Preferential tax policies are largely granted to foreign-invested enterprises in terms of business income taxes. Foreign-invested mining enterprises started to pay mining taxes and administrative charges according to law. Chapter 4 gives a detailed explanation.

Financial policy

For  those  foreign-invested  enterprises  with  domestic financing, the Chinese-owned commercial banks may accept guarantees from the foreign shareholders.  Foreign-invested enterprises are allowed to apply for RMB loans from designated Chinese-owned foreign exchange banks in China through  placing  foreign  exchange  deposits.  All  of a Foreign-invested company's capital may be used as foreign currency deposits for obtaining RMB loans. Overseas financial institutions or foreign-invested financial institutions in the PRC can act as guarantors for foreign currency deposits which secure  RMB  loans,  thus  canceling  foreign  exchange registration formalities; the specific restrictions regarding the credit rate of for foreign-owned banks providing foreign exchange  guarantees  are  also  removed.     Foreign shareholders guarantees and FOREX-warranted RMB loans must comply with industrial policies and be sufficient to meet the requirements of fixed-asset investment and working fund but must not be used for purchasing foreign exchange.

Special industry investment funds will be set up to release the burden of and Chinese parties with insufficient equity funds for additional investment in the foreign-invested enterprises.

At the same time, Chinese-owned commercial banks in China may release a certain ratio of equity loans to the Chinese shareholders  if the  due  amount  of additional  equity investment from the foreign shareholders of the Sino-foreign equity or cooperative joint ventures is ready at the same time.

Foreign-invested enterprises in China are allowed to use the foreign party's overseas assets to provide as a guarantee for RMB loans to overseas branches of domestic Chinese-owned banks. The loans will be released from the overseas or domestic branches of those Chinese-owned commercial banks.

Foreign investors who have invested in the energy resources areas which are particularly encouraged by the state will be provided   with   political   risk   insurance,   contract implementation insurance, guarantee insurance and other insurance services, subject to the principles of active involvement and fair play.