Law of the PRC on Foreign-funded Enterprises

Article 38 Where a piece of land not yet developed is to be used, the foreign-funded enterprise may either develop the land by itself or entrust a relevant Chinese enterprise to develop the land. The people's government at or above the county level at the place where the foreign-funded enterprise is to be established shall make overall arrangements for the construction of infrastructure.

Article 39 The standards for calculating and collecting the land use fee and land development fee paid by foreign-funded enterprises shall abide by the relevant provisions of China.

Article 40 The term for land use by the foreign-funded enterprise shall be the same as the approved operating period of this enterprise.

Article 41 In addition to the present Chapter, a foreign-funded enterprise may obtain the right to use land in accordance with other regulations in China.

Chapter VI Purchasing and Marketing

Article 42 Any foreign-funded enterprise may make decisions by itself on the purchase, for its own use, of machinery and equipment, raw materials, fuels, parts and components, auxiliary equipment, primary parts, means of transportation, office appliance (hereinafter referred to as goods and materials in general).

When purchasing goods and materials in China, any foreign-funded enterprise shall enjoy the same treatment as that enjoyed by Chinese enterprises under the same conditions.

Article 43 Any foreign-funded enterprise may sell its products in Chinese market. The state encourages all foreign-funded enterprises to export their products.

Article 44 Any foreign-funded enterprise may export their products either by themselves or by entrusting a Chinese foreign trade company or a company outside China with the sale of their products.

A foreign-funded enterprise may sell their products in China either by themselves or by entrusting any commercial organization with the sale of their products.

Article 45 Where any machinery and equipment contributed by a foreign investor as his investment is subject to import license according to the Chinese provisions, the relevant foreign-funded enterprise shall, by presenting the relevant approved inventory of equipment and goods and materials to be imported, apply for import license to the license issuing authority either directly or through an agency.

The foreign-funded enterprise shall prepare their annual import plans for goods and materials that are to be imported for their own use and necessary to their production within the approved scope of business, and apply for the import license to the license issuing authority every six months, if the import of goods and materials is subject to import license according to the Chinese provisions.

The foreign-funded enterprise shall prepare their annual export plans for products that are to be exported, and apply for the export license to the license issuing authority every six months, if the export of products is subject to export license according to the Chinese provisions.

Article 46 The price of goods and materials and any technical service imported by the foreign-funded enterprise shall not be higher than the normal price for goods and materials and technical services of the same kind in international market at that time. The price for the export products of a foreign-funded enterprise shall be determined by the enterprise itself in the light of the relevant prices in international market at that time, provided that they shall not be lower than reasonable export prices. If any enterprise evades taxes by importing products at a high price or exporting products at a low price, the legal responsibility of the relevant enterprise shall be investigated according to tax law by the tax authority.

Article 47 Any foreign-funded enterprise shall provide statistical data and submit statistical statements to the departments concerned in accordance with the provisions of the Statistics Law of the People's Republic of China and the relevant provisions of China concerning the statistical system for the utilization of foreign capital.

Chapter VII Taxation

Article 48 Any foreign-funded enterprise shall pay taxes in accordance with Chinese laws and regulations.

Article 49 Workers and staff members of a foreign-funded enterprise shall pay individual income tax in accordance with Chinese laws and regulations.

Article 50 Taxes on the following goods and materials imported by a foreign-funded enterprise shall be exempted or reduced in accordance with Chinese tax law:

(1) machinery and equipment, parts and components, materials for construction, and materials needed for installing and fixing the machinery, which are contributed as investment by the foreign investor;

(2) machinery and equipment, parts and components, means of transportation for production, and production management equipment, which are imported, for their own use in production, by the foreign-funded enterprise with funds within its total amount of investment;

(3) raw materials, auxiliary materials, primary parts, parts and components and packing materials imported by the foreign-funded enterprise for producing export products.

Where any goods and materials imported as mentioned in the preceding paragraph are, upon approval, resold in the territory of China or used for producing products to be sold in China, the relevant foreign-funded enterprise shall, in accordance with Chinese tax law, pay the taxes that were exempted or reduced.

Article 51 The export commodities produced by the foreign-funded enterprises may enjoy tax reduction, exemption or refund according to the relevant provisions of Chinese tax law, except those whose export is restricted by China.