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Regulations of the Guangzhou Economic and Technological Development Zone (1)
1987.01.22
GUANGDONG PROVINCE
REGULATIONS OF THE GUANGZHOU ECONOMIC AND TECHNOLOGICAL DEVELOPMENT
ZONE
(Adopted 7 October 1986 at the 22nd Session of the Standing
Committee of the 8th Guangzhou Municipal People's Congress and
approved 22 January 1987 at the 24th Session of the Standing
Committee of the 6th Guangdong Provincial People's Congress.)
CONTENTS
CHAPTER I GENERAL PRINCIPLES
CHAPTER II ADMINISTRATION
CHAPTER III INVESTMENT AND MANAGEMENT
CHAPTER IV TECHNOLOGY IMPORT
CHAPTER V PREFERENTIAL TREATMENT
CHAPTER VI SUPPLEMENTARY PRINCIPLES
CHAPTER I GENERAL PRINCIPLES
@@ Article 1. These Regulations are formulated in accordance
with the relevant laws and statutory regulations of the People's
Republic of China.
@@ Article 2. The Guangzhou Economic and Technological
Development Zone (hereinafter referred to as the Development Zone)
shall, subject to the approval of the State Council of the
People's Republic of China, be established along the eastern side
of the Huangpu District in Guangzhou Municipality.
@@ Article 3. The Development Zone shall be an economic and
technological area where the preferential policies of the State are
implemented under the leadership of the Guangzhou Municipal People's
Government.
@@ Article 4. The Development Zone shall, in accordance with the
long-term social and economic development plans of Guangzhou
Municipality, carry out economic and technological development,
follow the principles of integration of foreign investment
with domestic affiliations and assimilation of imported advanced
technology and equipment with high level management expertise
introduced from abroad, establish production enterprises and
scientific research institutions, develop new industries in a planned
and systematic way and focus on the development of high
technology products, in order to service the structural and
technological reform of industries in Guangzhou Municipality and
contribute to the development of technology and the economy of China.
@@ Article 5. The Development Zone shall provide investors
with a favourable investment environment, good working and living
conditions and the necessary public infrastructure, such as land
levelling, supply of water and electricity, drainage, environment
protection, communications, roads, wharfs, warehouses, schools and
hospitals.
@@ Article 6. Assets, due profits and other legitimate
rights and interests of an investor in the Development Zone shall be
protected by the laws and statutory regulations of the People's
Republic of China and by these Regulations.
Any enterprise, public institution or individual in the
Development Zone shall abide by the laws and statutory regulations of
the People's Republic of China and by these Regulations and shall
in no way impair the public interests of society.
@@ Article 7. Employees of an enterprise or a public institution
shall have the right, in accordance with the law, to form a
trade union organisation to protect their legal rights and interest as
employees and to conduct trade union activities.
CHAPTER II ADMINISTRATION
@@ Article 8. An Administrative Commission shall be established
in the Development Zone.
The Development Zone Administrative Commission shall, on behalf
of the Guangzhou Municipal People's Government, be responsible for
the uniform leadership and control of the Development Zone and for
the coordination of various Guangzhou Municipal departments and units
on matters concerning the Development Zone.
@@ Article 9. The Guangzhou Municipal People's Government shall
authorise the Development Zone Administrative Commission to:
(1) formulate and promulgate provisions on the administration
of the Development Zone in accordance with the law;
(2) formulate economic and social development plans for the
Development Zone and organise their implementation;
(3) examine and approve, within its authorised jurisdiction, the
proposed investment projects of investors in the Development Zone;
(4) undertake responsibility for the planning, expropriation,
development and management of land within the area of the Development
Zone;
(5) manage financial and tax collection matters within the
Development Zone and examine and approve applications by enterprises
in the Development Zone for a reduction of or exemption from
Enterprise Income Tax, Consolidated Industrial and Commercial Tax and
other taxes;
(6) supervise, administer and provide guidance to the various
types of enterprises and public institutions in the Development Zone;
(7) establish and administer various public services, such as
cultural, educational, sporting and health services;
(8) handle foreign related matters in accordance with
regulations, and assist in the handling of border exit and entry
formalities and other relevant matters;
(9) provide leadership to branch offices established in the
Development Zone by various Guangzhou Municipal People's Government
departments;
(10) appoint, dismiss or issue awards or penalties to personnel
of the organs of or units affiliated with the Administrative Commission;
(11) conciliate in disputes in the Development Zone; and
(12) undertake other functions.
@@ Article 10. The Development Zone may establish necessary
functionary organs in accordance with its needs, based on the
principle of simple and efficient administration.
CHAPTER III INVESTMENT AND MANAGEMENT
@@ Article 11. Foreign companies, enterprises and other
economic organisations or individuals (hereinafter referred to as
foreign investors) shall be encouraged to establish production
enterprises and scientific research institutions in the Development
Zone, and to provide advanced technology and management methods.
Domestic enterprises shall be encouraged to establish in the
Development Zone production enterprises which have the capacity to
generate foreign exchange earnings and to develop new technological
industries.
@@ Article 12. A foreign investor or a domestic enterprise may
invest in the Development Zone through:
(1) a Sino-foreign joint equity enterprise;
(2) a Sino-foreign co-operative enterprise;
(3) a foreign investment enterprise;
(4) an independent domestic enterprise or associated enterprise;
(5) compensation trade;
(6) leasing;
(7) purchasing of Development Zone bonds or shares; or
(8) other forms of investment approved by the law of the People's
Republic of China.
An enterprise classified under items 1, 2 or 3 of this Article
shall hereinafter be referred to as a foreign investment enterprise.
@@ Article 13. Construction of various infrastructure
facilities and public utilities in the Development Zone shall be:
(1) developed by the Development Zone independently or in
association with a relevant Guangzhou Municipal department;
(2) developed in the form of a joint equity or co-operative
project by a Development Zone enterprise in association with a
foreign investor or a domestic enterprise;
(3) developed through the contracting of a certain area to a
foreign investor or a domestic enterprise.
@@ Article 14. To establish an enterprise in the Development
Zone an application shall be submitted to the Development Zone
Administrative Commission and, following examination and approval,
business may only commence after registering with and receiving a
business licence from the Development Zone Administration for
Industry and Commerce and after tax registration procedures are
completed.
@@ Article 15. A foreign investor shall open an account with the
Bank of China or another approved bank in the Development Zone.
The Development Zone Bank of China or another bank designated
by the People's Bank of China may service a foreign investment
enterprise by providing Renminbi loans mortgaged by foreign exchange.
Foreign enterprises may, under the supervision and administration
of the department of the State Administration of Exchange Control,
mutually adjust their foreign exchange imbalances.
The various insurance policies required by a foreign investor
may be underwritten with the People's Insurance Company of China
established in the Development Zone or with another State
authorised insurance firm established in another part of China.
@@ Article 16. A foreign investment enterprise shall establish
books of account in either the Development Zone or Guangzhou
Municipality, conduct independent accounting, submit accounting
statements in accordance with regulations and accept supervision by
finance and tax organs.
@@ Article 17. A foreign investment enterprise in the Development
Zone has the right to decide by itself, within the extent of its
approved contract, production and operational plans, the raising
and the use of funds, the purchase of production materials, product
sales, wage standards, wage forms and bonus and allowances systems.
A foreign investment enterprise in the Development Zone may
decide by itself, in accordance with its production and operational
requirements, its organisational structure and personnel
arrangements, the recruitment or dismissal of its senior management
personnel and any increase of the number of or retrenchment of
employees.
@@ Article 18. If an enterprise in the Development Zone
suspends or terminates its operations, it shall report to the
Development Zone Administrative Commission and complete procedures
for temporary closure or termination of business accordingly. After
tax liabilities and debts have been cleared and procedures for
cancellation of the business licence have been carried out with the
Development Zone Administration for Industry and Commerce, the assets
of the enterprise concerned may be transferred and its foreign exchange
may be remitted abroad in accordance with regulations.
CHAPTER IV TECHNOLOGY IMPORT
@@ Article 19. Foreign and domestic enterprises, scientific
research institutions, tertiary institutions and engineers and
technical personnel shall be encouraged to engage in various
forms of technological co-operation in the Development Zone.
@@ Article 20. Technology imported into the Development Zone shall
be of an appropriate and advanced nature, including patented
technology, technology awaiting patent approval, proprietary
technology and technology which is of clear economic benefit.
@@ Article 21. The Development Zone shall focus on the import
of the following new technology:
(1) technology relevant to new industries and products
which are development priorities of Guangzhou Municipality or China;
(2) technology which will have a marked effect on the
technological renovation and updating of products of existing
enterprises in Guangzhou Municipality or China;
(3) technology which produces products which can be used to develop
export markets or as a substitute for import products;
(4) production and manufacturing technology which is particularly
needed in China;
(5) technology required for a specific industry or product of
Guangzhou or another part of China, in order for it to catch
up with advanced international standards.
@@ Article 22. The Development Zone at its outset shall import
appropriate technology which requires limited investment, has a
short recovery period and a quick return, and which produces
products which can be exported to generate foreign exchange earnings.
This shall be done in order to improve the transformation of
traditional products in Guangzhou Municipality and to improve the
level of scientific management of enterprises in Guangzhou
Municipality.
@@ Article 23. foreign and domestic production enterprises and
scientific research institutions shall be encouraged to
engage in combined production-scientific research in the
Development Zone and shall enjoy preferential treatment regarding
such aspects as site selection, factory establishment, credit loans
and taxation.
@@ Article 24. Technology may be imported in the following forms:
(1) licensing trade;
(2) technological co-operation;
(3) co-operative production or co-operative production research;
(4) hiring of experts;
(5) import of technological materials; or
(6) other.
@@ Article 25. An investor in the Development Zone shall be
permitted to establish a joint equity or co-operative enterprise by
using technology as capital investment.
In normal circumstances the technology share of capital shall not
exceed 20% of the registered capital of the joint equity
enterprise or co-operative enterprise. Investment of cash or kind
equal to more than the value of the share of technology in capital
shall also be required. Capital investment of technology in an
enterprise confirmed by the Administrative Commission as being
technologically advanced shall not exceed 30% of the registered
capital of the enterprise and where investment of technology
exceeds 20%, cash or investment in kind shall not be less than 20%
of the registered capital of the enterprise.
@@ Article 26. The Development Zone shall establish a
scientific and technological development fund for the import,
development, absorption and assimilation of high technology.
CHAPTER V PREFERENTIAL TREATMENT
@@ Article 27. The Development Zone shall reduce to 15% Enterprise
Income Tax on income from production, business operations and
other income of production enterprises with foreign investment in
the Development Zone. Where the operational period of such an
enterprise is 10 years or more, an application may be made by the
enterprise to the Development Zone taxation authority for exemption
from Enterprise Income Tax for two years from the first profit-making
year, and for a reduction of Enterprise Income Tax at one half of the
prevailing rate in the third to the fifth year.
@@ Article 28. The Development Zone Administrative Commission shall
decide whether a Development Zone enterprise is entitled to
preferential treatment in the form of a reduction of or exemption from
local income tax.
@@ Article 29. A foreign investor shall be exempt from payment of
income tax on dividends remitted abroad, provided that Enterprise
Income Tax has been paid.
@@ Article 30. In addition to those parties exempt from income
tax as provided by the law, a foreign investor that has no
establishment in china and that receives income such as dividends,
interest, rental or royalties from the Development Zone, shall have
income tax levied at a reduced rate of 10%. If the terms for the funds
or equipment provided are favourable and the assigned technology is of
an advanced standard, the granting of further reductions or
exemptions from income tax shall be determined by the
Development Zone Administrative Commission.
@@ Article 31. A Development Zone enterprise shall be exempt from
Customs duty and Consolidated Industrial and Commercial Tax on
building materials, production equipment, raw materials, assembly
parts, components, means of transport, and office equipment which are
imported for the enterprise's own use. If, however, products processed
from duty free raw materials, assembly parts and components are sold
domestically, retroactive payment of Customs duty and Consolidated
Industrial and Commercial Tax on the imports used shall be carried
out in accordance with regulations.
@@ Article 32. Export products manufactured by an enterprise
in the Development Zone may be exempt from Consolidated Industrial
and Commercial Tax, except for those which are State restricted
exports. Products sold domestically shall be subject to tax levies in
accordance with regulations.
@@ Article 33. Daily necessities and means of transport
imported for personal use by a foreign national, Overseas Chinese or
Hong Kong, Macao or Taiwan compatriot working for an enterprise
in the Development Zone or residing in the Development Zone shall
be exempt from Customs duty and Consolidated Industrial and Commercial
Tax, provided the amount of goods is of a reasonable quantity.
@@ Article 34. A production enterprise with foreign investment which
faces difficulties in paying Consolidated Industrial and Commercial
Tax during the first 3 years after start up of operations may, after
approval by the Development Zone taxation authority, pay a reduced
amount of or be exempt from Consolidated Industrial and Commercial Tax.
@@ Article 35. If a foreign investor reinvests its after-tax
dividends in the enterprise or in another enterprise in the
Development Zone for more than five years, 40% of the amount of
Enterprise Income Tax already paid on the reinvested dividends may
be refunded and, if the amount is reinvested in the establishment
or expansion of an exporting enterprise or a technologically
advanced enterprise, the full amount of Enterprise Income Tax paid
on the reinvested dividends may be refunded. If such reinvestment is
withdrawn in less than five years, the amount of refunded Enterprise
Income Tax shall be returned.
@@ Article 36. An enterprise in the Development Zone which
uses domestically produced machinery, raw materials or other goods
produced in China may calculate its accounts in foreign exchange
at the export commodity price for equivalent Chinese goods.
@@ Article 37. A foreign investment enterprise in the
Development Zone which is confirmed by the Development Zone
Administration Commission as an exporting enterprise or a
technologically advanced enterprise may enjoy the specific
preferential treatment stipulated in the provisions of the State
Council Regulations concerning the Encouragement of Foreign
Investment and of Guangdong Province and Guangzhou Municipality.
@@ Article 38. A domestic joint affiliation production enterprise
in the Development Zone which involves investment by an
enterprise under the jurisdiction of Guangzhou Municipality may,
following application to and approval by the Development Zone
taxation authority, pay Enterprise Income Tax at a reduced rate of 15%.
During the five year period after its first profit-making
year, an enterprise such as that mentioned in the previous
paragraph may be exempt from payment of the local supplementary
income tax and adjustment tax payments at the place where the
enterprise is located if the enterprise's after-tax profit derived
from the Development Zone is used in the Development Zone to
expand production or to establish an export-oriented industry. If
such profit is remitted to an urban or suburban area of Guangzhou
Municipality or a surrounding county, income tax differentials may
be exempt, but 10% of the income tax differential shall be submitted to
the local financial department in the district or county.
CHAPTER VI SUPPLEMENTARY PRINCIPLES
@@ Article 39. These Regulations shall also apply to enterprises
in the Development Zone invested in and operated by an Overseas Chinese,
Hong Kong, Macao or Taiwanese company, enterprise, other economic
organisation orindividual.
@@ Article 40. These Regulations shall take effect on the
date of promulgation and the Provisional Regulations of the
Guangzhou Economic and Technological Development Zone, promulgated
on 9 April 1985 by the Guangzhou Municipal People's Government,
shall be nullified at the same time.
@@ Article 41. The right to interpret these Regulations shall
reside with the Standing Committee of the Guangzhou Municipal People's
Congress. |
