Explanation on preferential policies

Updated: 2012-02-27

Explanation on preferential policies

According to the Reply on the Establishment of Tianjin Dongjiang Free Trade Port Zone from the State Council and the Regulations for Administration of Tianjin Dongjiang Free Trade Port Zone, the following six preferential tax policies stand:

1. The goods entering the bonded port from the outside of China shall be bonded by the customs pursuant to related regulations or exempted from tariff and import linkage tax;

2. The goods transported out of the bonded port to the outside of China shall be exempted from the export tariff;

3. The goods entering the domestic market from the bonded port shall go through customs clearance procedures pursuant to the provisions on goods import, and be levied with tariff and import linkage tax according to the actual state of the goods;

4. The products produced by an enterprise in the bonded port and sold in the port or transported out of China shall be exempted VAT and consumption tax;

5. The goods transactions among enterprises in the bonded port shall be exempted from VAT and consumption tax;

6. The entry of domestic goods into the bonded port shall be deemed as exports, and tax rebates shall comply with related provisions.

Furthermore, according to the Preferential Fiscal and Tax Policies for Promoting the Development of the Modern Service Industry of Tianjin issued by the Tianjin Municipal Bureau of Finance and other related authorities, Dongjiang Free Trade Port Zone is also entitled to the following 11 preferential policies:

1. For newly established large logistic enterprises for allocation, distribution, purchase and packing, and futures settlement warehouses, the financial authority at the same level shall refund 100 percent of sales tax in the first two years from the business starting year and refund 50 percent of the sales tax in the next three years; refund 100 percent of the local portion of business income tax in the first two years from the profit making year and refund 50 percent of the local portion of business income tax in the next three years.

2. For newly established large logistic enterprises for storage, the financial authority at the same level shall refund 100 percent of sales tax in the first year from the business starting year and refund 50 percent of the sales tax in the next two years; refund 100 percent of the local portion of business income tax in the first year from the profit making year and refund 50 percent of the local portion of business income tax in the next two years.

3. For newly established large specialized logistic enterprises and transport enterprises, the financial authority at the same level shall refund 50 percent of sales tax in the first three years from the business starting year; and refund 50 percent of the local portion of business income tax in the first three years from the profit making year.

4. For the interest accrued from fixed asset investment loans for the equipment and facilities exclusively for transport and storage, a subsidy equal to 20 percent of the interest shall be granted, with cumulative amount of no more than one million yuan.

5. For the transport equipment with newly established large specialized transport enterprises exclusively used for business operation, the method of accelerated depreciation may be adopted to draw depreciation, which may be deducted before income tax.

6. Imported goods (except those under the control of export passive quota) are exempted from license inspection and export quota control when they enter or leave the free trade port zone. There is no time limit for the goods storage in the free trade port zone.

7. Imported equipments, construction materials, facilities for enterprises building in the free trade port zone, a reasonable amount of office supplies for self-use, spare parts for maintenance and fuels and equipments for production are exempted from tariff and import linkage tax.

8. Imported raw materials, spare parts, components, packing materials and transit goods stored in the free trade port zone for export processing are bonded.

9. The products produced by enterprises within the free trade port zone for the purpose of selling in the free port zone or transporting out of China are free of VAT in the link of processing within the zone.

10. The products produced by enterprises within the free trade port zone for the purpose of selling in China shall be subject to tariff and import linkage tax based on the proportion of materials of overseas origin in the products.

11. The enterprises within the free trade port zone can open foreign exchange accounts for current items and special accounts for capital items. The profits, dividends and bonuses distributed to foreign investors can be remitted out of China through the accounts.

In addition, Free Trade Port Zone is entitled to all the financial, land, fiscal and tax policies entitled to Binhai New Area of Tianjin by the State.

On August 22, 2011, the Ministry of Finance and the State Administration of Taxation issued the Notice on the Sales Tax Policy for the Core Functional Zone in Tianjin Northern International Shipping Center. It specifies that from August 1, 2011: the income obtained by shipping enterprises registered in Dongjiang Free Trade Port Zone from international shipping businesses; the income obtained by storage, logistic and other service enterprises registered in Dongjiang Free Trade Port Zone from cargo transport, storage and handling services; and the income obtained by insurance enterprises registered in Tianjin from international shipping insurance service, shall be exempted from sales tax.