??. Tax policies??
1. Turnover tax??
1.1 Tax exemption from export goods??
Except otherwise there are separate state regulations, the goods produced by a foreign-funded enterprise and exported directly can apply to the tax bureau for the procedure of exporting return tax with bill of exporting return tax.
1.2 Tax exemption from import goods??
The raw materials imported by foreign-funded enterprises for the production of export products, turnover tax relating to importation is exempt according to state regulations.??
1.3 The raw materials imported by foreign enterprise for processing with materials supplied by clients are exempt from VAT and consumption tax relating to importation.??
2. Enterprise income tax??
2.1 Preferential tax policies for foreign-funded productive enterprises. Except that there are separate stipulations of the State Council concerning resources exploitation projects such as petroleum, natural gas, rare metals and precious metals, foreign-funded productive enterprises, which are scheduled to operate for an actual period of over 10 years are exempt from enterprise income tax for the first two profit-making years and shall be granted a 50 percent enterprise income tax reduction from the third through fifth years.??
Those foreign-funded enterprises engaged in agriculture, forestry and animal husbandry, after the regular period of tax preferential treatment (two years' tax exemption and three years' half reduction), shall be continuously enjoy a 15-30 percent reduction of enterprises' income tax in the next years with applications for tax exemption and approval from tax administration of the State Council.
2.2 Preferential tax policies in coastal economic open zones??
To those productive foreign-funded enterprises set up in the coastal economic open zones, the enterprise's income tax rate is reduced to 24 percent. Among them, the technology-intensive or intelligence -intensive projects, with long investment return period and investment volume of over 30 million USD, the constructional projects of energy, transportation and ports, etc. Enterprises' income tax is levied at a reduced rate of 15 percent with approval from the State Administration of Taxation.??
2.3 Preferential tax policies for exportation-based and advanced technical enterprises??
2.3.1 To those exportation-based foreign-funded enterprises, after the regular period of tax reduction, if the value of their export product exceeds 70% of the output value in the same year, they can get a half reduction of the enterprises' income tax. Among those, the enterprise that have paid enterprises' income tax at a rate of 15 percent can be levied at a reduced rate of 10 percent.??
2.3.2 To those advanced technical foreign-funded enterprises, after the regular period of tax reduction, if they remain to be advanced technical enterprises, they can get another 3 years' half income tax reduction. If the reduced rate is lower than 10%, it will be counted as 10%.
2.3.3 The foreign enterprise is exempted from business tax when transferring technique to our country. If the technique is advanced or price is favorable, the enterprises will be exempted from income tax after the approval of tax administration of the State Council. The foreign-founded enterprises (including research and development center using foreign investment) shall enjoy the same preferential policy.
2.3.4 If the cost on technological development has a 10% increase, the foreign-funded enterprises will be permitted to pay income tax with a half of the actual expense on technological development of that year after the approval of tax administration. Please refer to the administrative regulations on the cost of technological development before tax stipulated by the State Tax Bureau for details.
2.4 Preferential tax policies for particular industries and projects??
To those sino-foreign joint ventures dealing with construction of ports and wharves, enterprises' income tax is levied at a reduced rate of 15 percent. Among those, to the enterprises with more than 15 years' operational period, five years' income tax can be exempted and next five years' income tax can be reduced by half (since the first profitable year).
2.5 Preferential tax policies for reinvestment??
If the foreign investors of foreign-funded enterprises directly reinvest their profits getting from their enterprises to the same ones to expand their registered capital, or set up other foreign-funded enterprises with an operational period of no fewer than five years, 40 percent of the income tax collected on the reinvestment capital shall be returned after the applications of the investors are approved by Taxation Authorities. If the reinvested enterprises are exportation-based or advanced technical enterprises, all the income tax collected on the reinvestment shall be returned. If the enterprises established or expanded by the reinvestment of foreign investors can't reach the exportation standard within three years (from the very beginning of their production), or can't be confirmed as advanced technical enterprises any more, they should pay back 60 percent of the returned tax payment. If the operational period of the reinvestment enterprise is less than five years, all the returned tax payment should be paid back.??

??. Tariff policies??

2.1. All foreign-funded projects within the scope of classifications of Encouraged Projects of the "Industrial Catalogue Guiding Foreign Investment", the equipment to be imported within the projects' total investment in terms of values and for internal use will be exempted from tariffs and VAT related with import, but the equipment should be excluded in the "Catalogue of Imported Commodities to be Used in Foreign-funded Projects and be Exclusively Tax Exempted".
The equipment to be imported of the projects funded by loans from foreign governments and international financial institutions and for its own use, and the temporary non-priced equipment provided by foreign investors in their processing terms, shall be granted with preferential treatment in terms of tax exemption as that of the above-mentioned item.
2.2. If the foreign-funded enterprises in the list of classifications of Encouraged Projects of the “Industrial catalogue Guiding Foreign Investment “have technical innovation within the formal business scope, the equipment to be imported for internal use and technique, parts accessories, etc. will be exempted from tariffs and VAT in accordance with the rules of “Notice of adjustment on taxation of importing equipment”.
2.3. If the foreign-funded enterprises purchase domestic equipment within the project’s total investment and this kind of import equipment in the range of tax exemption, the VAT will be returned to them. If the foreign-funded enterprises have technical innovation and produce high-tech products in accordance with the national industrial policy, the expense they purchase domestic equipment will be regarded as income tax.
2.4. For the foreign-funded research and development center, the equipment to be imported within the projects total investment and for internal use and technique, parts, accessories, etc. will be exempted from tariffs and VAT in accordance with the rules of “Notice of adjustment on taxation of importing equipment”. The transferred technology will be exempted from the business tax in accordance with the regulations to domestic scientific research institution.
2.5. Any raw materials, fuel, unassembled parts, spare parts, components in set, auxiliary materials and packing materials required for contracts of exporting products imported by foreign-funded enterprises shall be placed in bond, Customs formalities of verification and cancellation shall be completed by the enterprise after they are processed into finished products and re-exported.??
2.6. Catalysts, catalytic agents, abrasives and fuel, etc., imported by enterprises in reasonable quantities consumed directly in the course of processing products for export shall be exempted from import duties and VAT.??
2.7. Exemption from export duties shall be granted to the exported goods produced by the enterprises itself, except for those restricted or otherwise stipulated by the state.??
??. Promotion Measures
3.1. One-stop Service: The Administrative Inspection & Approval Center has been established with 24 functional departments handling relevant procedures in the hall. For all the enterprises established by foreign parties in Penglai City, when all the documents and data are complete, Penglai Foreign Trade and Economic Cooperation Bureau will provide sweeping service and be responsible for every approval procedure and relevant matters until the project is put into operation.