Entrancechina-ENVIRONMENTS-Areas/Provinces-Shanxi

Shanxi Province is situated at west of North China, east of the loess plateau. For the geographical coordinates, which lies in the north latitude 34°34'-40°43', the east longitude 110°14'-114°33'.The width from east to west is about 290 kilometers, the length from north to south is about 550 kilometers, the total area of the whole province is about 156000 square kilometers, who takes up about the total area's 1.6%. The outline of Shan xi Province is about assumes the northeast diagonal southwest slightly the parallelogram. There has a lofty mountain of Taihang to make the natural blockade on the east, whose neighbor is He Bei Province. The west and south take the yellow river as the moat, with Shan xi and Henan faces one another; in the north, there has continuous Great Wall, and the Inner Mongolia Autonomous Region is on the border of it.

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Preferential Policies

Preferential Policy of Shanxi Province Encourage Foreigner to Invest

　　　 Main policy that encourage foreigner to invest in Shanxi province at present are as follows:

ⅠRegional Policy
1. Condition for set up foreign investment limit in our province (Foreign Invest Industry Guide Contents) and foreign share proportion limit as well as market opening extent is loose than eastern regions;

2. To encourage foreign invested enterprise in the eastern region to reinvest in our province. The project of foreign invest proportion exceed 25% is regarded as foreign invested enterprise and enjoy the corresponding treatment;

3. To allow coastal region foreign invested enterprise come to our province to contract, operate and manage foreign invested enterprise and domestic invest enterprise;

4. The high-new technical enterprise and the enterprise having high technology contents established in the economic and technological development zone and the high-new technical industry development zone at above province level in our province, the city go vernment and district government at the seated place as well as administration committee in development zone carry out "hold one meeting to discuss one matter", "special handle for special matter" and give special preference.

5. The project that is encouraged foreigner to invest, besides enjoy the regulated preferential policy, being approved, it is allowed to enlarge its relative business scope for constructing and managing the energy resource, traffic and urban infrastructure in large amount of investment and long recovery period; the allowed foreign invest project, if all its product directly exports, can be regarded as similar foreign invested project; the limited project for foreigner to invest, if the export volume occupies above 70% of the total sales volume, being approved, can be regarded as allowed foreign invest project; the allowed foreign invest project and the limited project for foreigner to invest, if it can elaborate our provincial superiority, can widen the condition properly, in which the allowed foreign invest project and the limited project for foreigner to invest that listed in the (Foreign Invest Superior Industry Contents In Middle and Western Zone (Shanxi)), can enjoy the preferential policy for foreign invest projects that are encouraged by Shanxi province.

ⅡTax Policy
1. Income Tax
(1) Practice preferential tax rate To levy income tax at 30% tax rate for foreign invested enterprise, at 24% tax rate for the enterprise built in Taiyuan city of our province, at 15% tax rate for the enterprise built in the high-new technical industry development zone and the economic and technological development zone at above province level in our province; to levy income tax can be reduced at 15% tax rate for foreign invested production enterprise in energy resource, traffic and infrastructure projects.

(2) Carry out reduction and exemption for income tax The foreign invested production enterprise can enjoy tax exemption from first year to second year starting from the profitable year, and half tax payment from third year to fifth year; the foreign invested enterprises that are encouraged by the state, after five years of tax exemption expire, can prolong three years for half income tax payment; the foreign invested enterprise that has advanced technology can enjoy tax exemption for two years and half income tax for six years; the exporting enterprise can enjoy the preferential policy i.e. tax exemption for two years and half income payment for three years, besides that, so long as the export volume is more than 70% of total sales volume, can enjoy the preferential policy of half income tax payment. After half tax reduction, if tax rate is lower than 10%, to levy the income tax from the enterprise at 10%. The foreign enterprise transfer technology to the domestic of our country, any technology belongs to the advanced technology or transfer condition is preferential, being approved by the taxation authority of the State Council, can exempt from income tax payment of the enterprise. The foreign invested enterprise engaged in the encouraged projects listed in (Foreign Invest Industry Guide Contents), the new added registered capital amount formed by additional investment reaches or exceeds USD 60,000,000, or the new added registered capital amount formed by additional investment reaches or exceeds USD 15,000,000 and reaches or exceeds the original registered capital by 50%, the income getting from additional invest project beyond the original contract, can be calculated individually and enjoy income tax concession preference at fixed period regulated in Article 8 clause 1 and clause.

(3) Carry out refunding income tax and counterbalance and deduct etc. preference Reinvestment refund. The foreign investor in foreign invested enterprise reinvests the profits getting from the enterprise to the enterprise, or invests to the other foreign invested enterprise, its operational period not less than five years, and being approved by the taxation authority, to refund 40% of paid income tax for the reinvestment part; directly invest to set up and enlarge the foreign invested enterprise and its product is for exporting or have advanced technology, to refund all its paid income tax for reinvestment part. Loss compensation. Loss in a year of the foreign invested enterprise and organ of production and management set up in our province by foreign country can be compensated by income in the next year; the income in next tax year is not sufficient to compensate and can be continue to compensate year after year, but not exceed five years maximum. Investment of purchasing domestic equipment cancounterbalance and deduct the income tax of enterprise. The foreign invested enterprise and foreign enterprise purchasing domestic equipment, meeting the encourage project in (Foreign Invest Industry Guide Contents), being approved, 40% of investment of purchasing domestic equipment can be counterbalanced and deducted from the new added income tax of the enterprise from the same year of purchasing equipment than the previous year. Technology development charge can counterbalance and deduct at the double. Technology development charge of foreign invested enterprise increase 10% than the previous year, being approved by taxation organ, allow to counterbalance and deduct the due income tax in the same year at 50% of actual occurred charge for technology development. The foreign invested enterprise purchasing domestic equipment in the total investment amount, if this import equipment belongs to free import contents scope, can be according to the regulation to counterbalance and exempt the income tax of enterprise. Technology development charge of foreign invested enterprise increase 10% than the previous year, being approved by taxation organ, allow to counterbalance and deduct the due income tax in the same year at 50% of actual occurred charge for technology development. Specific should contrast the (Management Method of Deduct Technology Development Charge Before Tax) worked out by the State Administration of Taxation and carry out.

2. Urban Real Estate Tax
The foreign invested production enterprise can be exempted from urban real estate tax for 10 years; the foreign invested nonproductive enterprise can be exempt from urban real estate tax for 5 years; to invest in our province for producing export product or the foreign invested enterprise that having advanced technology, the encouraged projects in (Foreign Invest Industry Guide Contents) and the superior industries in our province can be exempt from urban real estate tax during operation period.

3. Tax of Intermediate Links
As off January 1, 1994, to carry out unified value-added tax, consumption tax and turnover tax for foreign invested enterprise same as domestic enterprise.

(1) Turnover tax: The foreign enterprise transfer the technology to the domestic of our country can be exempted from the turnover tax, income of technology transfer of the foreign invested enterprise (including the research development center invested and built by foreigner) exempt from turnover tax.

(2) Value-added tax: The foreign invested enterprise purchasing domestic equipment in the total investment amount , if this equipment is instead of import equipment and is in the scope of free import contents, to refund domestic product value-added tax in full amount and according to the relative regulation to counterbalance and exempt the income tax of enterprise.

4. Import Links Tax
It is to exempt from the import duty and import links value-added tax at present for the import equipment purchased by the state encouraging and supporting foreign invested project and domestic invested project: The project belongs to the encouraged foreign invested project in (Foreign Invest Industry Guide Contents) and transfers the technology, import the self using equipment in the total amount of investment, with the exception of commodities in the (Imported Commodities Contents Not Except From Tax For Foreign Invested Project), can be according to the (Notice of Adjust Tax Policy for Imported Equipment from the State Council) to exempt from import duty and import links tax. In order to guarantee the policy continuity, the approved encouraged foreign invested projects and limited type B projects before April 1, 2002 according to the original (Foreign Invest Industry Guide Contents) (the date should be approved date for project feasibility study report), can be according to the regulation in (Notice of Adjust Tax Policy for Imported Equipment from the State Council) to exempt from import duty and import links tax. The research and development center invested by the foreigner , import self using equipment, its complete technology, fittings and spare parts that cannot be produced in China or its performance cannot meet the requirement, can be according to the (Notice Of Adjust Tax Policy ForImported Equipment From the State Council) to exempt from import duty and import links tax. The built encouraged foreign invested enterprise (including approved limited type B projects before April 1, 2002 according to the original (Foreign Businessman Invest Industry Guide Contents)), foreign invested research and development center, the technology renovation for foreign invested enterprise that having advanced technology and its product for export, in the original approved production management scope, to import self using equipment, its complete technology, fittings and spare parts that cannot be produced in China or its performance cannot meet the requirement, can be according to the (Notice of Adjust Tax Policy for Imported Equipment From the State Council) to exempt from import duty and import links tax.

ⅢLand Policy
The land used for investment of industry, commerce, finance, tour, service, commercial house etc. projects can get the right of land use by land transfer method; the land used for investment of agriculture, energy resource, traffic, urban infrastructure and other public utilities construction etc. projects can get the right of land use by allocate method. The foreign invested enterprise can exempt from site use fees for five years as off the date of getting right of land use; foreign invested the coal deep process, inversion and comprehensive use, steel, iron and aluminum smelt and process, chemical industry, machine-building and electronic industries, building materials, light industry and textile industry, farming, forestry, animal husbandry and side-line production development projects, high technical project and technology renovate for exist industrious enterprise, foreign invested enterprise that product is for export and the enterprise having high technology, can exempt from site use fees for five years as off the date of getting right of land use. When the period expires, to be according to the lower limit of standard regulated by the seated city and county to pay half land use fees for five years. When period of deduction and exemption of land use fees for foreign invested enterprise expires, to collect the land use fees at lower standard within the margin regulated by the state. The foreign invested projects that engage in farming, forestry, animal husbandry, side-line production and fishery development projects, set up energy resource and infrastructure projects, develop and use shallows tidal flat area or renovate and use wasted land projects, develop the nonprofit education, culture, medical treatment and health, sports, environmental protection etc. social benefit projects, being approved by the land administration department in the province, to exempt from the land use fees in the land use period. The foreign invested enterprise that gets the right of land use by land transfer method, doesn't pay the land use fees any more.

ⅣFinance Policy
When foreign invested enterprises raise fund in China, it is allowed that the Chinese capital commercial bank to accept guarantee of the foreign shareholder. It is allowed that the foreign invested enterprises apply Renminbi loan in an appointed Chinese capital foreign exchange bank by foreign exchange mortgage method. To allow domestic Chinese capital commercial bank to offer loans not exceeding 50% of capital stock to Chinese share holder, in the premise of the increased capital stock of foreign shareholder in cooperative enterprise enters into the account at the same time. To allow the foreign invested enterprises take foreign investor's overseas assets as mortgage to the domestic Chinese capital bank overseas branch, and the Chinese capital commercial bank overseas branch or domestic branch to offer loans to it. The foreign invested enterprises meeting conditions can apply to issue stock A or stock B. On the basis of active and reliable principle, to provide performance insurance and guarantee insurance services to the foreign investors who invested on the field such as energy resource, traffic etc. that is encouraged by the State mainly. According to (Loan Deducted Interest Management Method for Technology Renew and Renovate Project),to offer medium term loan or short term loan that deducted interest to the enterprises used for renewing technology and renovating technology.