Laws of the People's Republic of China

The Ministry of Foreign Economic Relations and Trade

Circular of the Ministry of Foreign Economic Relations and Trade on Issuing the Interim Provisions Concerning Contract Period of Chinese-foreign Equity Joint Ventures

WaiJingMaoFaZi [1990] No.56

October 22, 1990

(Adopted by the State Council on September 30, 1990 , Promulgated by WaiJingMaoFaZi [1990] No.56 of the Ministry of Foreign Economic Relations and Trade on October 22, 1990)

Article 1

These Provisions are formulated in accordance with the provisions of Article 12 of the Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures (Amended at the Third Session of the Seventh National People's Congress on April 4, 1990).

Article 2

As regards the establishment of Chinese-foreign equity joint ventures (hereinafter referred to as joint ventures), the parties to a joint venture which is engaged in investment projects encouraged and permitted by the Chinese government, except as stipulated in Article 3 of these Provisions, may decide, through consultation, to or not to prescribe a contract period in the contract.

Article 3

As regards the establishment of joint ventures, the parties to a joint venture, which falls under one of the following lines of business or one of the following circumstances, shall prescribe in their contract, through consultation, a contract period in accordance with the provisions of the relevant laws and regulations of the state:

(1)

service trades, such as hotels, apartments, office buildings, recreation and entertainment, catering trade, taxi service, development and printing of colour films and photos, maintenance, business consultancy, etc.;

(2)

joint ventures engaged in land development and real estate;

(3)

joint ventures engaged in the prospecting and development of natural resources;

(4)

joint ventures engaged in projects subject to investment restriction as stipulated by the state;

(5)

joint ventures for which a contract period shall be decided, through consultation, as prescribed by other laws and regulations of the state.

Article 4

Joint ventures, the parties to which decide, through consultation, not to prescribe a contract period in their contract, shall be examined and approved in accordance with the state regulations concerning the limits of powers and procedures for examination and approval. With the exception of those joint ventures to be directly examined and approved by the Ministry of Foreign Trade and Economic Cooperation, other examining and approving authorities shall, report within 30 days, any such applications they have examined and approved to the Ministry of Foreign Trade and Economic Cooperation for the record.

Article 5

Joint ventures, the parties to which decide, through consultation, not to prescribe a contract period in their contract, may enjoy the preferential treatment of reduction of or exemption from taxes in accordance with the state provisions concerning taxation and with the approval of the tax authorities. In cases where the actual term of operation of these joint ventures fails to reach the number of years set by the state for enjoying the preferential treatment of taxation, the joint ventures concerned shall, according to law, pay the taxes which have been exempted or reduced.

Article 6

Joint ventures, whose establishment was approved before these provisions become effective, shall operate in accordance with the approved contract period stipulated in the contract. However, as regards a joint venture which does not come under one of the circumstances specified in Article 3 of these Provisions, in the event that the parties to the joint venture agree unanimously to modify the stipulation in the contract concerning the contract period, and to restipulate the joint venture as one without contract period, the parties to the joint venture shall submit a report to justify such a modification, sign an agreement of the modification of the contract, and apply to the original examining and approving authorities for examination and approval. The original examining and approving authorities shall, within 90 days as of the date of receipt of the said application, decide to approve or disapprove it. After obtaining the approval, the joint venture shall, in accordance with the stipulations of Article 4 of these Provisions, go through the procedures for the record.

Article 7

These Provisions shall enter into force as of the date of promulgation.