Laws of the People's Republic of China

INTERIM REGULATIONS OF THE STATE COUNCIL OF THE
PEOPLE'S REPUBLIC OF CHINA ON PREFERENTIAL TREATMENT TO
SINO-FOREIGN JOINT VENTURES ON HARBOR AND WHARF CONSTRUCTION

(Promulgated by the State Council of the People's
Republic of China on September 30, 1985)

 

SUBJECT: EQUITY JOINT VENTURES

ISSUING-DEPT: STATE COUNCIL OF CHINA

ISSUE-DATE: 09/30/1985

IMPLEMENT-DATE: 09/30/1985

LENGTH: 814 words

TEXT:

[Article 1] These Regulations are formulated to promote the economic cooperation and technical interchange between China and foreign countries and to speed up the development of ports and terminals, in order to keep in line with the needs of the socialist modernisation of this country.

[Article 2] In jointly financing port or terminal projects within the territory of the People's Republic of China through the establishment of joint ventures with Chinese partners, foreign corporations, enterprises or individuals involved (hereinafter referred to as foreign partners) shall, besides abiding by the laws and statutes of regulations pertaining thereto, be entitled to preferential treatment in accordance with the provisions of these Regulations, in view of the fact that such projects are usually capital intensive and time consuming in nature and the rate of return is low.

[Article 3] Joint ventures heretofore referred to may operate for a fairly long term, for instance over 30 years, the actual time period being subject to consultation and agreement between the parties.

Upon expiration of the term of operation, an extension of such a term can be applied for if the parties so desire and, after the application has been duly submitted and approved by the Ministry of Foreign Economic Relations and Trade or other bodies designated thereby for this purpose, the extension will be granted. 

[Article 4] The said joint ventures may recover their investment by accelerating the depreciation of the fixed assets upon application by the parties involved, and the same shall be granted after being examined and endorsed by the taxation authorities and approved by the Ministry of Finance of the People's Republic of China.

[Article 5] Exemption from customs duties and consolidated commercial-industrial tax can be obtained with respect to joint ventures importing materials, cargo handling facilities, transportation equipment and other devices or appliances for terminal construction purposes, provided that the expenses incurred have been covered by and kept within the limit of the gross investment of the project.

[Article 6] 15% income tax shall be levied on and paid by the joint ventures heretofore referred to.  However, newly established joint ventures with a term of operation of 15 years or more shall, counting from the first profit-yielding year, be exempted from income tax for the first through the fifth year of operation, and be entitled to a 50% reduction of such income tax for the fifth through the tenth year of operation, upon application to and approval by the taxation authorities of the provinces, autonomous regions or municipalities (directly under the central government) where such joint ventures are located.

Upon the approval of the Ministry of Finance of the People's Republic of China, the term of exemption from or reduction of taxation referred to in the preceeding paragraph can be further extended, as appropriate, in favour of joint ventures having difficulty paying such tax after such term has expired.

Any exemption from or reduction of local income tax levied on joint ventures, if so justified, shall be determined by the respective governments of the provinces, autonomous regions or municipalities (directly under the central government) where such joint ventures are located.

[Article 7] Foreign partners of joint ventures remitting outside China their profit gained from the operation of joint ventures shall be exempted from income tax.

[Article 8] The rates and tariffs for stevedorage and other related charges pertaining to joint-ventured ports and terminals shall be fixed by the joint ventures themselves and filed with the departments in charge and the local price authorities for record.

[Article 9] Where the foreign partners of a joint venture reinvest in new joint-ventured berths or terminals for a term not less than five years with their profit earned through the operation of such a joint venture, a 40% refund of the amount of tax already paid on account of such reinvestment shall be granted upon application by such foreign partners and approval of the taxation authorities.

[Article 10] The said joint ventures may concurrently engage in other business items calling for less capital investment, shorter periods of construction and yielding higher rates of profit gains.  Matters pertaining thereto shall be handled pursuant to the relevant rules and regulations currently in force.

[Article 11] These Regulations shall be applied mutatis mutandis to corporations, enterprises or individuals from Hong Kong or Macao making investments in joint ventures for port and terminal development projects in the People's Republic of China.

[Article 12] These Regulations shall come into force on the date of promulgation.