Circular of the General Office of the Ministry of Commerce on Ensuring the Effective Implementation of Tax Reduction and Exemption Policies for Foreign-invested Enterprises on Imported Equipment in Foreign-invested Projects Encouraged by the State
Shang Ban Zi Han [2023] No. 510
November 8, 2023
The competent departments of commerce in all provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan and Xinjiang Production and Construction Corps, Sichuan Provincial Bureau of Economic Cooperation, all pilot free trade zones and national economic and technological development zones,
In order to thoroughly implement the work arrangements made by the CPC Central Committee and the State Council for stabilizing foreign investment, in accordance with the Foreign Investment Law of the People's Republic of China and its implementing regulations, the Several Opinions of the CPC Central Committee and the State Council on Thoroughly Implementing the Strategy for Large-scale Development of Western China (Zhong Fa [2010] No. 11), the Circular of the State Council on Adjusting the Tax Policy of Imported Equipment (Guo Fa [1997] No. 37), the Opinions of the State Council on Further the Enhancing Utilization of Foreign Investment (Guo Fa [2010] No. 9), the Opinions of the State Council on Further Optimizing the Environment for Foreign Investment and Increasing Efforts to Attract Foreign Investment (Guo Fa [2023] No. 11), the Order of the Ministry of Commerce and the State Administration for Market Regulation [2019] No. 2 (Measures for Reporting of Information on Foreign Investment), and other regulations, and upon approval of the General Administration of Customs, the circular on ensuring the effective implementation of tax reduction and exemption policies for foreign-invested enterprises (the "enterprises") on the imported equipment in foreign-invested projects encouraged by the state (the "encouraged projects") are hereby given as follows:
1. Enterprises or their investors shall provide true, accurate and complete information on the encouraged projects when submitting foreign investment information report, which shall include whether the project is included in the scope of the catalog of industries for encouraged foreign investment issued by the state, the project content (project name and specific content), the project nature, the applicable industrial policy item, the total amount of project investment, (value in USD), the starting year of the project, the ending year of the project, the amount of foreign exchange used in the project (value in USD), among others.
If the investment and operation activities of an enterprise involves multiple project contents, it shall provide the aforesaid information by each project content separately; if a project is eligible for multiple items in the catalog of industries for encouraged foreign investment issued by the state, multiple industrial policy items may be provided in the column for the applicable industrial policy item.
If any change is to be made in the aforesaid information, enterprises or their investors shall promptly submit relevant change report as per relevant regulations.
2. Competent departments of commerce below the provincial level, and relevant departments of pilot free trade zones, and national economic and technological development zones (the "reporting institutions") shall, after receiving the complete initial and change reports, submit the relevant information on the encouraged projects to the provincial-level competent departments of commerce via the unified platform for the business system of the Ministry of Commerce (the application for the comprehensive management of foreign investment).
Upon the comparison and verification by a provincial-level competent department of commerce, an enterprises or its investors will claim from the reporting institution the Receipt of the Initial Report of Foreign Investment (Company/Partnership) or the Receipt of the Change Report of Foreign Investment (Company/Partnership) (see the appendix for its format, collectively as the "Receipt") where the information on the encouraged project will be specified on the "Remarks" column, and shall perform the import tariff exemption procedures for the imported self-use equipment for the "encouraged projects" with the customs as per relevant regulations by presenting the Receipt.
3. If an investment project carried out by an enterprise that is established under the domestic re-investment (including multi-layer investment) by a foreign-invested enterprise is subject to the Catalog of Industries for Encouraged Foreign Investment and is included in the scope of industrial policy items encouraged by the state, the provincial-level competent department of commerce shall notify the competent customs office directly under the General Administration of Customs (GAC) of the relevant information on such project in writing in accordance with this Circular.
4. The competent departments of commerce at the provincial level and below shall carry out supervision and inspection of the information on the encouraged projects reported by enterprises or their investors in accordance with the Measures for Reporting of Information on Foreign Investment and the Circular of the General Office of the Ministry of Commerce and the General Office of the State Administration for Market Regulation on Thoroughly Implementing the Foreign Investment Reporting System and Strengthening and Improving In-process and Ex-post Regulation.
5. If a reporting institution finds that any enterprise violates relevant provisions on the tax reduction and exemption for imported equipment in the encouraged projects, it shall promptly report the case to the provincial-level competent department of commerce, who will then report the case to the competent customs office directly under the GAC.
6. This Circular shall apply to the cases where enterprises or their investors claim the Receipt after the Foreign Investment Law of the People's Republic of China takes effect.
All localities shall study the relevant national policies for encouraging the development of foreign investment in a timely manner, and actively help enterprises or their investors to submit information in strict accordance with the industrial policy items for foreign investment encouraged by the State applicable to the projects they invest in. If there is any doubt in the applicable item for a project, the provincial-level competent department of commerce shall carry out argumentation in collaboration with relevant competent departments at the same level and experts in relevant fields and ensure that the policy accurately applies to enterprises. If any problem arises from the work, local provincial-level competent departments of commerce and all customs offices directly under the GAC shall strengthen their communications, coordination, and collaboration, and, if necessary, shall report the problem to the Ministry of Commerce (Department of Foreign Investment Administration), with a copy to be sent to the General Administration of Customs (Department of Duty Collection).
