INTERIM PROVISIONS OF THE STATE COUNCIL OF THE PEOPLE'S REPUBLICOF CHINA ON PREFERENCES FOR THE CONSTRUCTION OF PORTS AND PIERS WITHCHINESE AND FOREIGN JOINT INVESTMENT

INTERIM PROVISIONS OF THE STATE COUNCIL OF THE PEOPLE'S REPUBLICOF CHINA ON PREFERENCES FOR THE CONSTRUCTION OF PORTS AND PIERS WITHCHINESE AND FOREIGN JOINT INVESTMENT This English document is coming from "LAWS AND REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA GOVERNING FOREIGN-RELATED MATTERS" (1991.7) which is compiled by the Brueau of Legislative Affairs of the State Council of the People's Republic of China, and is published by the China Legal System Publishing House.

In case of discrepancy, the original version in Chinese shall prevail.

Whole Document INTERIM PROVISIONS OF THE STATE COUNCIL OF THE PEOPLE'S REPUBLIC OF CHINA ON PREFERENCES FOR THE CONSTRUCTION OF PORTS AND PIERS WITH CHINESE AND FOREIGN JOINT INVESTMENT (Promulgated on September 30, 1985) Article 1 These Provisions are formulated with a view to expanding economic cooperation and technological exchange with foreign countries, speeding up the construction of ports and piers, and meeting the needs of the socialist modernization programme.

Article 2 All the laws, regulations, provisions, and rules governing Chinese-foreign equity joint ventures shall apply to joint ventures running port and pier construction projects (hereinafter called joint ventures) established within the boundaries of the People's Republic of China by foreign companies or enterprises, or individual investors (hereinafter called foreign joint ventures) on the one hand and Chinese companies or enterprises on the other, and preferential treatment shall, in accordance with these Provisions, be granted to them out of consideration for their huge investment amount, long construction cycle, and narrow profit margin.

Article 3 A joint venture may have a comparatively long contract period, which can be as long as over 30 years. The specific period shall be fixed by the parties to the joint venture through consultation. A joint venture may extend the contract period at the expiration of the contract provided that the extension is agreed upon by the parties concerned and approved by the Ministry of Foreign Economic Relations and Trade of the People's Republic of China or an agency authorized by it.

Article 4 A joint venture may recover its investment by accelerated depreciation of its fixed assets provided that its application for the adoption of accelerated depreciation procedure is examined by the local tax authorities and subsequently submitted to and approved by the Ministry of Finance of the People's Republic of China.

Article 5 Raw materials, loading and unloading equipment, means of transport, and other production facilities essential for pier construction that are imported by a joint venture with funds drawn from its gross investment shall be exempted from customs duties and industrial and commercial consolidated taxes.

Article 6 A joint venture shall pay income tax at a rate of 15 percent. Newly founded joint ventures with a contract period of over 15 years shall be exempted from income tax for the first five years as from the first profit-making year, and shall pay an income tax at half of the normal rate for the subsequent five years, provided their applications for exemption and reduction of tax are approved by the tax authorities of the provinces, autonomous regions, or municipalities directly under the Central Government where they are located. If a joint venture still finds it difficult to pay the full income tax after the tax exemption or reduction period prescribed above expires, it may have its tax exemption and reduction period appropriately extended with the approval of the Ministry of Finance of the People's Republic of China.

Exemption and reduction of the local income tax levied on a joint venture shall be decided by the people's governments of the provinces, autonomous regions, or municipalities directly under the Central Government where the joint venture is located.

Article 7 Profits earned by the foreign joint venturer in a joint venture shall be exempted from income tax when they are remitted out of China.

Article 8 The rates of charge on cargo handling and other charges on use of facilities at a pier built by a joint venture may be fixed by the joint venture, but shall be filed with the authorities in charge of the venture and the local pricing authorities for the record.

Article 9 When the foreign joint venturer of a joint venture reinvests its share of profit from the joint venture in building new berths or piers, 40 percent of the income tax paid on the reinvested portion of its profit share shall be refunded, provided that the new contract period is not shorter than 5 years and the foreign joint venturer's application for refund of tax payment is approved by the tax authorities.

Article 10 When a joint venture is permitted to run concurrently some other projects requiring smaller amounts of investment, a shorter construction cycle, and allowing a wider profit margin, the related matters shall be dealt with in accordance with the relevant provisions in force.

Article 11 Matters relating to port and pier construction by joint ventures with investment of companies, enterprises, or individuals from Hong Kong and Macao regions shall be dealt with by applying mutatis mutandis these Provisions.

Article 12 These Provisions shall come into force as of the date of promulgation.