Preferential policies

Enterprises registered with SETDZ will enjoy preferential policies in addition to those by Liaoning Province and Shenyang city governments.

1. Foreign－funded enterprises will be subject to a reduced tax levy of 15％ of enterprise income. Productive enterprises scheduled to operate for a period of over 10 years will, upon approval, be exempt from enterprise income tax for the first and the second profit－making years, and will be subject to a 50％ reduction of enterprise income tax from the third through the fifth years. Non－productive foreign－funded enterprises will pay the enterprise income tax in accordance with relevant stipulations of China but shall be subsidized by the development zone in reference in the tax rate for productive enterprises. Those whose operation period is of over 10 years will enjoy a full refund of the paid enterprise income tax for the first year and half of the amount for the second and the third years. 　　
2. In accordance with relevant stipulations, when the period for enterprise income tax reduction and exemption expires, export－oriented enterprises shall pay enterprise income tax at a reduced rate of 10％ if the export value exceeds 70％ of their total annual output value. Technologically advanced enterprises shall pay the tax at a reduced rate of 10％ for an additional three years. After the period of reducing or exempting the income tax has expired for the advanced technology enterprises, it will be lengthened for 3 years to collect the enterprise’s income tax uniformly in accordance with the rate of 10％.
3. Export－oriented and technologically advanced enterprises will be exempt from local income tax. Other foreign－funded enterprises will be exempt from the tax during the first five tax paying years, and subject to a 50％ reduction in local income tax for each of the following three years.
4. Foreign business people who reinvest their share of profits in the same enterprise from which their profit is earned, or in other enterprises in the development zone for an operation period of five years or more, shall, upon approval, receive a 40％ refund of enterprise income tax previously paid on the reinvested amount. Those who reinvest their profit earnings to establish or expand export －oriented or technologically advanced enterprises with and operation period of five years or more shall receive a full refund of enterprise income tax previously paid on the reinvested amount.
5. Losses incurred by foreign－funded enterprises within a given tax year can be carried forward to the next year and offset against that year’s income. Should the income in the subsequent tax year be insufficient to offset the losses, the balance may be offset against income in successive years, with carry forward limited to a period not to exceed five years.
6. Foreign enterprises that have not established facilities in China, but do earn income from dividends, interest, rentals, royalties or other sources in the development zone shall pay enterprise income tax at a reduced rate of 10％, except for those who are exempt from the tax according to law. Those who supply funds or equipment on favorable terms or transfer advanced technology will, upon approval, be exempt from the tax.
7. After－tax profits remitted abroad by foreign investors will be exempt from income tax.
8. Products processed with Chinese－made semifinished products and raw materials for export by foreign－funded enterprises in the development zone shall be exempt from customs duties on export products if their value is increased by more than 20％.
9. When calculating taxes due for the value －added tax on sales volume, the tax rate is zero for goods exported by foreign funded enterprises that were registered and established after January 1st, 1994. 　　
10. Foreign－funded enterprises engaged in the construction of infrastructure facilities such as those of transportation, energy and communications and which are scheduled to operate for a period of over 15 years shall, upon approval, be granted preferential treatment in terms of enterprise income tax far greater than other production oriented enterprises.
11. Foreign－funded enterprises in the development zone who pay land lease fees within three months enjoy appropriate reductions in line with preferential treatment policies.
12. Foreign－funded enterprises which temporarily fail to meet the conditions for production and operation in the development zone may register in and pay taxes to the development zone, and will be allowed to operate outside of the zone and enjoy related preferential treatments adopted by the development zone.

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