-----Preferential policies for income tax

1、Policies for the West Development Strategy: Foreign investment in projects encouraged by the Catalogue for the Guidance of Foreign Investment Industries or listed in the Catalogue of Mainstay Industries for Foreign Investment in Guangxi and the resulting revenue accounts for 70% or above of the total revenue of the Foreign-invested Enterprise, the corporate income tax will be levied at the rate of 15% during the period of 2001 and 2010.

2、Policies for foreign-investedManufacturing Enterprise: Foreign-invested manufacturing enterprises, planning to operate for over ten years, shall, starting from the first profit making year, exempt from corporate income tax for the first two years and levied at half amount of corporate income tax for the following three years (“2 years’ Exemption and 3 years’ Reduction” of tax holidays for short).

3、Policies for the “Two Types of Enterprise”： ① “Hi-Tech Enterprise” (Recognized by The Foreign Investment Administration Office of Guangxi Zhuang Autonomous Region), besides enjoying the “2 years’ Exemption and 3 years’ Reduction”, can enjoy a further tax holiday of “3 years’ Reduction”.② “Export-oriented Enterprise” (Recognized by The Foreign Investment Administration Office of Guangxi Zhuang Autonomous Region), after enjoying the tax holiday of “2 years’ exemption and 3 years’ Reduction”, should its export value take up over 70% of the total production value, it would enjoy a further tax holiday of “3 years’ Reduction”.

4、Policies for Re-investment with Profits: ① Re-investment with profits gained from the Foreign-invested Enterprise to increase its registered capital or to set up a new enterprise planning to operate for at least five years, can apply and be refunded 40% of the corporate income tax of the reinvestment amount, under the approval of tax bureau. ② Re-investment with profits gained from “Hi-tech Enterprise”, or “Export-oriented Enterpriser”, to expand the enterprise or to increase the registered capital planning to operate for at least five years, can apply and be refunded all of the corporate income tax of the reinvestment amount, under the approval of tax bureau.

----- Preferential Policies for Import Duty and Value Added Tax

1、Policies for Import of Equipment:① Equipment imported by Foreign-invested Enterprises of encouraged project, shall be exempt from import tariff and value added tax, except for equipment listed in “Catalogue of Non-Tax-Free Import Commodities for Foreign-invested Enterprises”. ② Equipment imported by foreign investment export-oriented enterprises shall be subject to import tariff and value added tax at first. Then, from the first date of this enterprise starting operation, the tariff and tax collected shall be refunded by 20% per year for five years, under the condition that authoritative offices have proved all products are for export.

2、Policies for Imports of Components and Raw Materials: Imports of components and raw materials for producing export commodities (including imports of quota commodities, special registered commodities and other commodities), will be supervised by the customs as bonded commodities and exempt from import tariff and value added tax.

3、Policies for Export Products: Foreign-invested Enterprise exports its products shall be exempt from export tariff. The relevant corporate income tax shall be proceeded by exemption, countervailing or refunding. Exemption refers to that value added tax at production and sales shall be exempt. Countervailing refers to that tax collected from purchase of raw materials, components, fuel, energy, etc. shall countervail tax payable for products not export. Refund refers to that, when tax refundable for export products exceeds the amount collectable, the exceeding amount shall be refunded.

----- Preferential Policies for Special Areas

Income tax to be levied at the rate of 15% on a long-term base will be applied to the following enterprises:

n       Foreign-invested manufacturing enterprise established in Nanning Economic and Technological Development Zone;

n       Foreign-invested Enterprise engaged in construction of ports or wharves;

n       Foreign-invested Hi-tech enterprise established in Nanning New and Hi-tech Development Zone;

n       Foreign-invested Hi-tech enterprise established in Guilin New and Hi-tech Development Zone

 Income tax to be levied at the rate of 24% on a long-term base will be applied to foreign investment manufacturing enterprise established in the following cities and counties:

n       cities of Nanning, Beihai, Wuzhou, Qinzhou, Yulin and Fangchenggang;