TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 12

by the extension of foreign trade 'privileges' to other cities, notably the 14 open coastal cities (see below).

ADVANTAGES OFFERED TO FOREIGN INVESTORS

16.

The Chinese authorities have set out the following main inducements to foreign investors:

(1) Entry and exit procedures and other formalities are simplified;

(2) The income tax rate for enterprises is set at 15 per cent, which is lower than in the rest of China. For enterprises with an investment of more than US $5 million or those using high technology and having a relatively long-term capital turnover, income tax rates are reduced by 20 to 50 per cent or exempted altogether for 1 to 3 years. Foreign businessmen who re-invest their profits in the SEZS for 5 years or more may apply for a reduction or exemption of income tax on the amount re-invested;

(3) Industrial property is available at lower costs than elsewhere in the region;

(4) A portion of the products of enterprises in the SEZs can be sold within China;

(5) The following categories of goods are exempt from import tariffs and unified industrial and commercial taxes: machinery, spare parts, raw materials, fuel and trucks imported to meet the construction and production needs of the SEZs; tableware and imports required for the operation of tourist and food industries; office equipment and means of transport imported by enterprises and other foreign organisations to meet their own needs;

(6) Export products manufactured in the SEZs are exempt from export taxes:

(7) Tax exemption is granted to businessmen from outside China who invest and set up enterprises and permanent offices in SEZs and who work and live there;

17. Operational conditions within the SEZs are also more attractive than in the rest of China:

(1) Enterprises run exclusively by foreign or Overseas Chinese have the right to manage themselves provided they observe Chinese laws and regulations;

(2) Joint-ventures and cooperative enterprises are managed by their own board of directors. In general, local government does not interfere in the administration of enterprises;

(3) Workers are employed under the individual labour contract

system;

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/(4)