Investment Incentives in China

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Incentives or guarantees

Forms of Aid
Foreign investors enjoy corporation tax reductions, exemption of tax on dividends repatriated during a period and other tax advantages
The Ministry for Foreign Trade and Economic Cooperation (MOFTEC) can be contacted for any information concerning opportunities in China.
Privileged Domains
China especially encourages overseas investments in high technology, appropriate energies and the sectors with export oriented activities.
Privileged geographical sectors
The government has created various zones, granting each tax exemptions or tax incentives to attract overseas investments. They are primarily the 5 special economic zones and the 14 coastal cities.
The special zones are Shenzhen (at the border of Hong-Kong), Zhuhaï (close to Macau), Shantou, Xiamen (vis-à-vis Taiwan) and the island of Hainan. They were selected because they were completely under-developed.
Les 14 coastal cities are Dalian (in the province of Liaonong), Shanghai, Ningbo, Wenzhou (in the province of Zhejiang), Fuzhou (in the province of Fujian), Guangzhou, Zhanjiang (in the province of Guangdong), Beihai (in the autonomous region of Guangxi Zhuang), Tianjin, Yantai, Qingdao (in the province of Shandong) and Lianyungang, Nantong (in the province of Jiangsu). Since a few years, other cities are also regarded as coastal towns profiting from the same status. Unlike the 5 special zones, which were not underdeveloped, but key industrial centers in China. Overseas investments made it possible to improve the infrastructures and create new, more advanced ones.
Privileged Geographical Zones
3 Free zones also exist in Shanghai, Tianjin and Shenzhen where imports are free of all customs duties and taxes provided no goods produced inside the zone are resold on the local market. Bonded warehouses, trading companies and production intended for export are authorized there. In addition 2 other zones exist in the same regions (Export Processing Zones) also enjoying exemptions from customs duties, but in which trade activity is not authorised.
Country Risk

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Tax incentives offered to foreign investors

Special tax treatments
Projects in the “encouraged category” are eligible for certain tax incentives such as a reduced tax rate of 15% for qualified high-tech and new technology companies, tax “holidays” for specify infrastructure, primary industry, environmental and resource saving projects, tax credit for investment in specialised equipment and a 50% deduction for qualified R&D expenses. For more information on tax incentive programs you can contact the Investment Promotion Agency (CIPA).
Useful Links
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