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Preferential Policies

According to the relevant state and provincial regulations, foreign investors will enjoy the following preferential policies when they invest in Dongguan City, Guangdong Province, PRC.

I. Exemption or Reduction of Enterprise Income Tax

The income tax of foreign invested enterprises is 25%.

(I). The income tax of the following foreign invested enterprises shall be levied at the rate of 15%:

1.With the approval of the State Taxation Bureau (STB), foreign-funded enterprises located in the old sections of the cities which are called coastal open areas, special economic zones and economic and technological development zones, projects falling into the category of technology-intensive and knowledge-intensive projects, or projects with over US$30 million of foreign investment and the cycle of investment return in long, or projects of energy, transportation and harbor construction;

2. Sino-foreign joint ventures engaged in the construction of harbor and berth;

3. Such financial institutions as foreign funded banks and Sino-foreign equity banks set up in special economic zones and other areas approved by the State Council, with the minimum requirement being that foreign investors' financial inputs or the operating funds injected by the head office of a bank to the branch exceeds USS10 million and the term of operation exceeds 10 years;

4. Foreign Invested enterprises deemed to be high-tech and new-tech enterprises located in areas determined to be high and new tech development zones by the State Council;

(II). Should the foreign partner to an foreign-invested enterprise directly re-invest the profit gained from the enterprise in that enterprise, expand the registered capital or use it to fund the setting up of other foreign-invested enterprises with an over-five-year term of operation, on the application of the investor and with the approval of taxation authorities, shall have 40% of the already paid income tax on the portion used for re-investment refunded; should the foreign investor use its profit derived from the foreign-invested enterprises to launch or expand a product-exporting or technologically-advanced enterprise in China with an over-5-year term of operation, with the verification and approval of taxation authorities, the amount of enterprise income tax already paid on the portion of profit used for re-in-vestment will be refunded

(III). If the foreign-invested enterprises have paid the income tax for the part of revenue derived from abroad, the enterprises can be approved to deduct this part of income tax from the total income tax which shall be paid in China; however, the amount of deduction can not exceed the revenue derived from abroad.

(IV). The profit derived by foreign investors from foreign-invested enterprises shall be exempt from income tax.

(V). If foreign-invested enterprises invest in the industries under encouraged catalogue and class B of restricted catalogue, purchase domestic equipment within their total investment capital, should the equipment be under the catalogue of tariff-ex-emption equipment, the value-added tax that has been paid by the enterprises should be totally refunded as well as to be taken as credit for enterprise income tax.

(VI). If annual loss incurred in the foreign-invested enterprises located in China, the enterprises are permitted to compensate for the loss by using the revenue derived from the next tax year; if it is still not enough, it can compensate for the loss the same way year by year; however, the time limit is five years. For foreign-invested enterprises that incur loss at the initial stage, the year when the enterprise can make profits after they compensate for the losses will be considered the first year of profit making.

(IX). If the annual increase of the costs for technological development of foreign-invested-enterprises is over 10%, (including 10%), with the approval of the taxation authorities, the enterprises can be approved to deduct the amount 50% of its actual costs used for technological development from its total taxable income of the year. Detailed implementation shall be in accordance with the Administrative Provisions on Deducting Enterprises' Technological Development costs from the Total Taxable Income Before Tax issued by the State Taxation Bureau.

II. Exemption or Reduction of Tariff, Value-added Tax, Consumption Tax and Business Tax

(I). Since January 1, 1998, projects listed in the Encouraged Entries of the State Industrial Catalogue Guiding Foreign Investment (Jointly promulgated by the SDPC, SETC and MOFTEC and revised in March 11, 2002) as well as all the permitted projects exporting all products, can have their imports of equipment from import tariffs and import stage VAT, on condition that the imports are within the investment volume, for the projects own use and are not included in the Catalogue for Imports not Exempted from Tax in Foreign Funded Projects. The imports for the own use of the projects financed by foreign government loans and international financial organizations and imported equipment which are not evaluated by foreign investors of processing trade shall be exempt from import tariffs and import stage VAT in accordance with the Provisions of Tariffs-Free Import Equipment for Foreign Investment Projects, i.e., imports not included in the Catalogue for Imports not Exempted from Tax in Foreign Funded Projects, For the above mentioned projects, techniques, auxiliary equipment and spare parts imported according to the contract together with the equipment shall be exempt from import tariffs and import stage VAT.

(II). The Sine-foreign equity joint venture banks or foreign banks set up in special economic zones, starting from the date of operation, shall be exempt from the business tax for 5 years.

(III). The agro-based produce sold by the foreign-invested enterprises engaged in animal and plant cultivation, forestry, animal husbandry and aquatic industry shall be exempt from the value-added tax.

(IV). Processing and assembling goods for export and the related processing cost shall be exempt from the value-added tax and the consumption tax.

(V). For export products from compensation trade projects, should the value-added tax have been charged in the production stage, tax rebates shall be granted after such goods have cleared the customs. For export goods under compensation trade, tax rebates shall be granted without presenting certificates of export exchange earnings receipt.

(VI). For the already established "encouraged" foreign-in-vested enterprises, foreign-invested R & D centers, technologically-advanced and product-exporting foreign-invested enterprises, during their technological transformation, if they import self-use equipment and related technologies, components and parts, which are within the original approved business scope and which can not be produced domestically or the functions of local products can not meet their needs, such imports shall be exempt from tariffs and import stage taxes.

(VII). When foreign-invested R & D centers import self-use equipment and related technologies, components and parts within their investment volume, which cannot be produced domestically or the functions of local products cannot meet their needs; such imports shall be exempt from tariffs and import stage taxes. Their income from technology transfer will be exempt from business tax under the same conditions as the domestic enterprises.

(VIII). For foreign enterprises transferring technologies to the enterprises within China, if the technologies are advanced or the terms of conditions are favorable, with the approval of the tax authorities of the State Council, they can be exempt from business tax and enterprise income tax. Foreign-invested enterprises are exempt from business tax on the income from the technology transfer.


Dongguan is a newly-rising industrialized city in China, which is well-known for its developed manufacturing and industrial chain. Meanwhile, it is an international manufacturing base with pillar industries of electronic information, communication equipment, textile and garment, furniture, building material, toy, paper-making, food and beverage, hardware and plastics, etc. Take Dongguan’s IT industry for example, more than 3700 enterprises establish an important manufacturing base and sourcing center of IT products in the world.

What's New

Mayor of Dongguan city, Yuan Baocheng, met the Hungarian delegation led by Istvan Uihelyi, vice chairman of Hungary Parliament, on November 18th.
China Foreign Trade E-Commerce Meet ing & The 2nd FTF Annual Meeting 2012 was held in Song Shan Lake, central part of Dongguan city, on November 8th.
China Processing Trade Products Fair (CPTPF), held from September 16 to 19, consisted of 10 special events such as the high-level forum for development of processing trade, high-level dialog of circulation trade enterprises and processing trade enterprises and procurement linkage, which increased the influence and effectiveness of CPTPF and achieved a win-win deal.
Humen Port succeeded in attracting the project of South China Petrochemical Trading Center, up to 3 billion RMB, at a recent promotion in Shenzhen.