Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation

Circular of the Ministry of Foreign Trade and Economic Cooperation Concerning Importing Equipment by Enterprises with Foreign Investment

WaiJingMaoZiFa [2000] No.478

November 8, 2000

All committees (departments or bureaus) of foreign trade and economic cooperation in provinces, autonomous regions, municipalitie directly under the Central Government and municipalities separately listed on the State plan :

In the spirit of encouraging foreign investment by the State Council, the General Administration of Customs has issued the Circular Concerning the Import Tax Policy for Further Promoting Foreign Investment (ShuShui [1999] No.791). After consulting with the General Administration of Customs, certain issues concerning equipment import by enterprises with foreign investment involving encouraged and restricted Group B projects, research and development center for foreign investment, and export-oriented and advanced technology enterprises with foreign investment are notified as follows:

1.

Certificates for importing upgrade equipment, technology and accessories by enterprises with foreign investment that involve encouraged and restricted Group B projects

(1)

Enterprises with foreign investment involved in the encouraged and restricted Group B projects, which are engaged in updating and repairing original equipment with free capital outside of their total committed investment, shall have their certificate for the import of upgrade equipment, technology and accessories issued by those authorities which have granted the original project confirmation letter. Certificates to change items specified for the enterprise, such as capital increase, shall be issued by the authorities in charge of approval and examination. Projects invested at below the specified amount shall be approved and examined by the relevant provincial authorities.

For the format of the certificate, see Attachment 1 (ShuShui [1999] No.791); items mentioned below shall take the same form.

(2)

Enterprises with foreign investment established with approval before December 31, 1997 engaging in encouraged, restricted Group B projects, that are involved in the upgrade or repair of original equipment with free capital outside of their total committed investment, shall have their certificates for the import of upgrade equipment, technology and accessories issued by the original authorities in charge of foreign trade and economic cooperation under whose approval the enterprises were established (For local projects, the certificates shall be issued by the provincial authorities in charge of foreign trade and economic cooperation).

2.

Certificates for the import of equipment, technology and accessories by a research and development center with foreign investment

(1)

Research and development centers with foreign investment (including internal research and development centers of enterprises with foreign investment), which had been established under relevant statutes with the approval of authorities in charge of trade and economic cooperation, shall have the same authorities issue the letter of confirmation as a foreign-invested project encouraged by the state. The form is included in the attachment, and shall be filled out with reference to the requirements of Attachment 4 of the Urgent Notice of the General Administration of Customs for Implementing the State Council's Circular Concerning the Adjustment of Tax Policies on Equipment Import (ShuShui [1997] No.1062).

(2)

Research and development centers with foreign investment (including internal research and development centers of enterprises with foreign investment) involved in the upgrade and repair of original equipment with free capital outside of their total committed investment, shall have the certificates for the import of upgrade equipment, technology and accessories issued by those authorities which granted the original project confirmation letter.

(3)

Research and development centers with foreign investment invested with legal person status, shall have the quota of foreign exchange used to import duty-free equipment be appraised and decided on the basis of their total committed investment and amount of free capital.

(4)

Research and development centers with foreign investment , established with non-legal person status by enterprises with foreign investment involved in permitted or restricted Group A projects, shall in principle be considered a branch of such enterprises. The quota of foreign exchange used to import duty-free equipment shall be appraised and decided according to the approved operating capital of such branches. The authorities in charge of examination and approval shall, once and for all, appraise and decide the inventory and amount of money used for the import of duty-free equipment of the internal research and development centers of such enterprises. The provincial authorities in charge of examination and approval will issue project confirmations, and certificates for the import of upgrade equipment, technology and accessories. In their applications, enterprises shall enumerate the financial budget, inventory and quota of foreign exchange allocated for the research and development center, and submit audited financial statements for the previous year.

3.

Certificates for the import of upgrade equipment, technology and accessories by export-oriented and advanced technology enterprises with foreign investment

Export-oriented and advanced technology enterprises with foreign investment involved in the upgrade and repair of original equipment with free capital outside of their total committed investment, shall have the Certificate for the Export of Products of Enterprises with Foreign Investment or the Certificate for Advanced Technology Enterprises, issued by MOFTEC or the authorities in charge of foreign trade and economic and cooperation in the provinces and special economic zones.

If the aforementioned enterprises are categorized as belonging to two or more types of enterprises within the five categories, such enterprises can choose the form in which they apply and receive the certificates for the import of upgrade equipment, technology and accessories.

4.

Criteria for appraising and accepting imported equipment

Upgrade equipment, technology and accessories imported by the enterprises with foreign investment for their own production with free capital outside of their total committed investment, shall be designated as "jointly-invested, jointly-operated equipment" or as "foreign-invested equipment." These imports shall administered according to the regulations concerning import under investment, and checked by customs against "Specialized Audit of Enterprise with Foreign Investment Imported Items" sealed by MOFTEC or the provincial authorities in charge of foreign trade and economic cooperation onto the Imported Equipment List The import license for items restricted from import can be handled with the approval of the above-stated authorities.

All departments in charge of foreign trade and economic cooperation shall seriously handle the issuance of project confirmation letters and import licenses according to regulations stipulated in supplementary notices. The power for examination and approval shall not be transferred to lower levels. If any questions arise during this process, please report to the MOFTEC division of foreign investment.

The circular shall come into force as of the date of promulgation. The above-mentioned imported goods, which have arrived at the ports but have not yet gone through the customs procedures of registration and examination before the promulgation of this circular, shall be handled by procedures stated within this circular.

Attachment: Project Confirmation Letter for Research and Development Center with Foreign Investment (format)(omitted)