(Adopted at the tenth session of the Standing Committee of the tenth People's Congress of Ningbo Municipality on June 30, 1994, ratified at the twelfth session of the Standing Committee of the eighth People's Congress of Zhejiang Province on August 31, 1994, promulgated on September 7,1994 by the No.7 announcement of the Standing Committee of the Ningbo People's Congress， and shall go into effect on the date of promulgation.)
Chapter I General Provisions
Article 1. With a view to promoting the exploiting, constructing and developing of the Daxie Island, these regulations are formulated in accordance with the Constitution of the People's Republic of China and the pertinent laws and regulations of the People's Republic of China.
Article 2. As approved by the State Council of the People's Republic of China, the International Trust and Investment Corporation of China shall develop the Daxie Island in tracts under the policy toward the economic and technological development zones.
Development Zone of Daxie (hereinafter referred to as DDZ) shall be established on the Daxie Island.
Article 3. Following the principle of integrating the economic and technological cooperation with both the overseas and the domestic, the DDZ shall be devoted to attracting foreign capital, importing advanced technology, equipment and scientific management to build the Daxie Island an economic and trading center at port with the export processing and technologically high and advanced enterprises as the central industry, international trade, goods transshipment ,storage and transportation as the pillar and the tertiary industry well developed.
Article 4.The land in the DDZ adopts a system of compensated usage. Overseas investors can get the land-use right in accordance with the law, and can transfer, lease, or mortgage the right or use it in other economic activities legally.
Article 5. The investor's property, due profit and other lawful rights shall be protected by the Chinese laws, regulations as well as this document.
Organizations and individuals in the DDZ shall observe the laws, regulations of the People's Republic of China as well as this document.
Chapter II
Administrative Agency and Its functions
Article 6.The Administrative Committee of the DDZ (hereinafter referred to as the DDZAC) is established in the DDZ as an agency of the People's Government of Ningbo (hereinafter referred to as the PG), and shall take the responsibility to administer the DDZ on behalf of the PG.
Article 7. The DDZAC shall take the following functions and powers:
1.To draft the overall plan and the plan of the economic and social development of the DDZ and organize the implementation after the procedure of examination and approval.
2. To formulate the regulations on the administration of the DDZ and organize the implementation,
3. To examine and approving or examining and submit to senior authorities for approval investment projects in the DDZ,
4. To take charge of finance, revenue, labor, personnel, public security ,transportation, price, industry & commerce administration, and other social affairs in the DDZ,
5. To manage the land and the real estate business in the ETDZ,
6. To ensure the enterprises' operational autonomy in the ETDZ,
7. To administer the import & export , the economic and technological cooperation with the outside and other foreign-related economic activities in the DDZ,
8. To deal with the foreign-related affairs,
9. To make uniform plan and management upon the infrastructure and the public facilities,
10.To take charge of the protection of environments and cultural relics in the ETDZ,
11. To initiate and manage the public welfare work as culture, education, science and technology, sanitation, physical culture and sports and the public welfare work,
12. To coordinate and supervise the work of the branches or agencies assigned to the DDZ by relevant departments of the People's Government of Ningbo,
13.Power of examination and approval and other functions and powers authorized by the People's Government of Ningbo municipality.
Article 8. The EDDZAC can set up operating divisions to be in charge of the specific affairs in the DDZ, if necessary.
Article 9.The administration concerning finance, insurance, foreign currency, customs, inspection of the import and export of goods, and harbor superintendence shall be administered by the relevant departments of the People's Government of Ningbo municipality or their branches set up in the DDZ.
Chapter III Investment and Operation
Article 10. Overseas and domestic enterprises, other economic bodies or the individuals are encouraged to invest and establish the following items and enterprises:
1.The infrastructures as ports, docks, storage, bridges, roads, water supply, drainage, power supply, gas supply and communication,
2. Export-oriented enterprises, technologically advanced enterprises, scientific research institutions or the industrial traffic enterprises which are in accord with the state's industrial policy,
3.The industries concerning finance, commodity trading, information consulting, real estate trading, traveling, hotel and entertainment service.
Article 11.The following industrial enterprises are prohibited in the DDZ:
1.The enterprises with backward technologies or equipments,
2.Causing environmental pollution without effective measures of prevention,
3.Or which are prohibited by the Chinese laws or regulations.
Article 12.The following forms are adoptable in the DDZ:
1.Sino-foreign equity joint venture,
2.Sino-foreign cooperative joint venture,
3.Exclusively foreign-owned enterprises,
4.Independent operation or joint operation by the domestic investors,
5.Sino-foreign compensation trade,
6.Business operations under lease,
7.To purchase the stocks and bonds of the enterprises in the DDZ,
8.And other forms been permitted by the laws, regulations of the People's Republic of China.
The enterprises taking the first three forms will be referred to as foreign-invested enterprises hereinafter.
Article 13. To invest and establish enterprises or institutions in the DDZ, the investor shall make application to the DDZAC, after receiving approval, obtain the certificate of right to the use of land and register with the industry and commerce administration department and the taxation authorities.
Article14.An enterprise in the DDZ shall keep the account books and make independent accounting in accord with the rules described in Corporate Accounting Codes and General Rules on Financial Affairs of Enterprises, and shall submit accounting statements and statistical reports in accordance with the legal provisions and be subject to the supervision of the DDZAC.
The annual accounting statements of a foreign-invested enterprise should be verified by a certified public accountant of China and get the certification.
Article15.An enterprise in the DDZ is legally entitled to autonomy in business operations, formulating its own production or business program, raising and using funds, purchasing raw materials and selling its products, deciding the organization and the size of staff, deciding rules upon wage and the forms of distribution, personnel training and employing or dismissing workers.
Article 16.The enterprises in the DDZ shall provide civilized, safe and sanitary working conditions for their staff and workers and guarantee their legal rights and interests in accordance with the provisions of the State, the Province of Zhejiang and the City of Ningbo.
The enterprises in the DDZ shall exercise the social insurance system in accordance with the provisions of the State, the Province of Zhejiang and the City of Ningbo.
Article17. Upon approval, foreign-trade enterprises can be set up in the DDZ, and the foreign-trade enterprises outside the ETDZ are encouraged to set up their branches in the DDZ and operate import and export businesses.
Article 18.With the approval of the relevant departments of the State, foreign-capital bank, Sino-foreign joint venture bank or other financial institutions can be established in the DDZ.
Article 19.An enterprise in the DDZ shall open an account in a bank or other financial institutions in the DDZ.
Article 20.An enterprise in the DDZ shall procure insurances from the Branch of the People's Insurance Company of China in the DDZ or other insurance companies being licensed by the state government.
Article 21.While closing its business, the enterprise located in the DDZ shall, in accordance with legal procedure, liquidate its assets, credits and debts and undergo formalities for closure of business and cancellation of the business license. After the cancellation of the business license, the investors' asserts can be transferred, and the capital of foreign investors can be remitted abroad in accordance with relevant rules.
Chapter IV Preferential Treatment
Article 22.Production-oriented enterprises with foreign investment in the DDZ shall be subject to enterprise income tax at the reduced rate of 15%.
Among these enterprises, those scheduled to operate for a period of ten years or more, upon approval by the tax authorities in the DDZ, shall be exempt from income tax in the subsequent two years since the first profit-making year, and be allowed to a reduced tax rate of 7.5% in the third through the fifth years.
Article 23. After the period of reduction and exemption stipulated in the second section of Article 22 has expired, export-oriented enterprises with foreign investment can pay enterprises income tax at a reduced tax rate of 10%, for any year in which the output value of the export products of the enterprise amounts to 70% or more of the output value of the products of the enterprise for that year.
Article 24.The technologically advanced enterprises that remain as technologically advanced enterprises after the period of reduction and exemption stipulated in the second section of Article 22 has expired, the payment of enterprise income tax at a reduced rate of 10% may be extended for a period of three years.
Article 25.If the capital invested by the foreign investors or allocated by a parent bank is more than ten millions dollars, a foreign-capital bank or a Sino-foreign equity joint bank being established in the DDZ, upon approval, shall pay enterprises income tax at a reduced tax rate of 15% if it is scheduled to operate for a period of ten years or more. Upon approval, it can be exempt from income tax in the first profit-making year, and be allowed to a reduced tax rate of 7.5% in the second and third years.
Article 26.The Sino-foreign equity joint venture engaged in the construction of port and dock shall be subject to enterprise income tax at the reduced rate of 15% in the DDZ. Those scheduled to operate for a period of fifteen years or more, upon approval, shall be exempt from income tax in the first five years, and be allowed to a reduced tax rate of 7.5% in the sixth through the tenth years.
Article 27.Production-oriented enterprises with foreign investment in the DDZ shall be exempt from local income tax in the subsequent five years since the first profit-making year. Those scheduled to operate for a period of ten years or more, if it can satisfy the conditions the government of Zhejiang province set, may be exempt from local income tax in the subsequent six or ten years since the first profit-making year.
Article 28.Lossees incurred in a tax year by any foreign-invested enterprise in the DDZ may be made up by the income of the following tax year. If the income of the following tax year is not ample, the making up may continue no more than five years.
Article 29.Any of the foreign investors reinvesting its share of profit obtained from the foreign-invested enterprise to his own enterprise or other enterprises in the DDZ to operate for a period of not less than five years, upon approval by the tax authorities in the DDZ, can be refunded 40% of the income tax already paid on the reinvested amount. If the profit is invested to export-oriented enterprises or technologically advanced enterprises, all the income tax paid on the reinvested amount can be refunded. The refunded income tax shall be paid back if the investment is withdrawn within five years.
Article 30.The profit obtained by a foreign investor from the foreign-invested enterprises in the DDZ is exempt from the income tax.
Article 31.Excepting those items being free of income tax in accordance with the law, dividends, interests, rentals, royalties and other income derived from sources within the DDZ by a foreign investor having no establishments in China can be subject to income tax at a reduced tax rate of 10%. Those who provide capital or equipment on preferential terms or transfer advanced technology can enjoy a preferential treatment of further tax reduction or tax exemption upon the approval of the ETDZAC.
Article 32.The products manufactured in the DDZ shall be exempt from export duties when exported by an enterprise in the DDZ. Those export products that are processed from customers' materials and components
outside the DDZ can be treated as the products manufactured in the DDZ if there is an appreciation of 20% in value through a substantive process.
Article 33.Building materials, production and management equipment, fuel for productions, office supplies and the spare parts for maintenance of the above items shall be exempt from custom duties.
The materials, spare parts, fittings, packing materials or dinner service for traveling diet business shall be exempt from custom duties if it is imported by an enterprise in the DDZ for the production of export products. Where the products were diverted for sale on the domestic market, the enterprise shall make up the entry formalities and make up the duties in accordance with the relevant rules.
Article 34.The machines, equipment and other materials for capital construction imported by the DDZ for the construction of the infrastructure in the DDZ shall be exempt from custom duties
Article 35.The building materials, office supplies and management equipment imported by the administrative agencies or institutions in the DDZ for their own use shall be exempt from custom duties within the reasonable quantity.
Article 36.With the verifying documents by the DDZAC, being checked and approved by the customs, the articles for family use imported by resident foreigners of the foreign-invested enterprises or foreign experts in the DDZ shall be exempt from custom duties within the reasonable quantity.
Article 37.The preferential treatments upon value added tax and consumption tax in the link of import to the import goods in the DDZ shall be handled in accordance with the relevant regulations of the State.
Article 38. With its own property or foreign exchange as mortgage, a foreign-invested enterprise in the DDZ can apply for loans from banks or other financial institutions.
Article 39. A foreign-invested enterprise in the DDZ can adjust the surplus and deficit of its foreign exchange through the foreign exchange adjustment center.
Article 40. Foreign-invested enterprises in the DDZ enjoy right of priority in the supply of water, electricity, transportation and facilities for communication that are necessary for the production and operation.
Article 41.The relevant governmental offices shall simplify the entry and exit formalities towards the overseas staff of the organizations in the DDZ or the staff being sent overseas on business.
Article 42.Besides the preferential treatments stipulated in this document, the overseas and domestic investors, enterprises and institutions in the DDZ may enjoy the preferential treatments stipulated by the Government of the state, the People's Government of Zhejiang province or the People's Government of Ningbo municipality.
Chapter V Supplementary Provisions
Article 43.The enterprises invested in the DDZ by overseas Chinese, individual investors from Hong Kong, Macao or Taiwan, or their enterprises or economic institutions, is subject to the rules concerning the foreign-invested enterprises stipulated in these regulations.
Article 44.The power of construction on the problems arising from the specific application of these regulations is authorized to the People's Government of Ningbo municipality.
Article 45.These regulations shall go into effect on the date of promulgation.
