| Economic & Technological Development Zones | High Tech Industrial Developmet Zones | Export Processing Zones | Free Trade Zones |
Industrial Orientation | Uniting foreign and domestic industries, new industries, and scientific research organizations, developing new industry and tertiary industry, focus on attracting high tech, high investment projects | Encouraging investment in export processing industries and companies servicing export processing industries, including wharehousing and procurement companies. | Encouraging investment in trade, logistics, warehousing, export processing, shipping, finance, and sales institutions. |
Related Regulations |
Tax rate for foreign funded manufacturing companies | 15%(exempt from 3% local tax ) |
Tax discounts for foreign funded industries | Companies that have been in operation for more than 10 years are eligible for the “Two exempt, three half off” policy: the first two profit gaining years are exempt from tax, and years 3~5 are taxed at a rate of 7.5%. |
Tax discounts for advanced technology industries | After the “two exempt, three half off” program outlined above, these companies also receive 3 additional years of 10% tax rate. |
Tax discounts for exporting companies | After the “two exempt, three half off” program outlined above, these companies also receive a 10% tax rate. |
Policies encouraging reinvestment of after tax profit | Reinvesting in one’s own or another company for a period of 5 or more years entitles a company to a refund of 40% of the taxes paid on the reinvested funds. If the company reinvesting is an exporter or high tech company, it is entitled to a full refund. |
Differential Policies |
Duty and value added tax on imported equipment and components for self use | “encouraged” manufacturing industries are exempt. | Unconditional exemptions |
Duties and value added taxes on imported office equipment and management equipment | No exemptions | Unconditional exemptions |
Duties and vaule added taxes on imported raw materials and components | Processing trade companies can choose duty free import; otherwise no exemptions. | Unconditional exemptions |
Licenses for equipment, raw materials and office equipment imported for processing trade projects | Projects “encouraged” by the national government are exempt from licensing. Other projects need licenses. | All processing trade projects are exempt from licensing. |
Domestic sale of products made from duty free materials | Taxed according to product’s value | Taxed according to product’s value | If made partially from domestic materials, then only the imported materials are taxed. |
Refund of value added tax for exported products made from domestic materials | Tax can only be refunded after products have left the country. | Tax can be refunded when the domestic materials enter the Shanghai EPZs | Tax can only be refunded after products have left the country. |
Customs clearance models | Different customs reporting or transfer models are used for goods imported or exported to different places, relatively complex | “One time reporting” “One form, one examination” model; 24 hour customs clearance service. | For air transport, the “Direct clearance” method is applied. |
Tax refunds on exports | Tax can be refunded when goods are actually exported | Tax can be refunded when domestic materials are imported into the Shanghai EPZs | Customs reporting procedures can begin when domestic materials enter the duty free zone. Tax can be refunded when goods leave the country |
Processing Trade Banks Deposit Account System | Divided into four types of companies - A,B,C and D- for the sake of deposit account management | No deposit account management system | N/A |
Foreign exchange policies | Sales, settlement, and exchange system and foreign exchange verification system in place | Companies foreign exchange income can be fully retained; no foreign exchange verification system. |
