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Regulations of Yunnan Province for Foreign Investment

Regulations of Yunnan Province for Foreign Investment

2006-11-14 11:31:37

Chapter 1 General Provisions

Article 1 On the basis of the state laws and regulations and particularities of the province, these regulations are hereby set forth for the purpose of encouraging foreign investment in the province, protecting the legal rights and interests of foreign-funded enterprises, regulating the actions of the administrative organizations thus promoting foreign investment in the province.

Article 2 All the organizations and individuals falling under the jurisdiction of the province which are involved in foreign investment and its administration are subject to these regulations.

Article 3 The Foreign Investment Office of the Provincial Government is responsible for organizing and coordinating foreign investment in the province. The Provincial Government Departments for planning economic & trade, foreign trade and economic cooperation, foreign affair, construction, environmental protection and administration for industry & commerce are obliged to provide their services to foreign investors in line with respective area of responsibility.

Article 4 Foreign investors propose their investment projects which should be in accordance with the Investment Guide and Guidelines For Foreign Investment published by the province and the state respectively. Foreign investment is encouraged in the following fields: infrastructure, agriculture, bio-industry, mining, new-technology, tourism, dormitory housing project, environmental protection.

Article 5 Foreign investment is encouraged in various forms including equity joint venture, contractual venture and solely-funded enterprise. Other forms are also possible such as joint shareholding, majority shareholding, joint operations, merger, outright purchase, leasing, trusteeship, contracting out, renovation, restructuring and mixed ownership of the state owned, collectively owned, or private enterprises. Build-Operate-Transfer, purchase of operation rights and utility fee collecting right are also options for infrastructure projects.

Article 6 Foreign-funded enterprises are under the jurisdiction of the state laws and regulations and must not endanger national security or public interests. The contractual obligations of all parties will be overseen by the relevant government departments.

Article 7 Government offices at various levels will give prizes to those who have made remarkable contributions to attract foreign investment. Details will be set down by the provincial government.

Chapter 2 Establishing, Adapting and Terminating the Foreign-Funded Enterprises

Article 8 For the convenience of foreign investors, there will be a high-efficient one-stop assessment & approval and registration procedure to be used when establishing foreign-funded enterprises.

Article 9 For projects which are in line with the guiding policy, the relevant government offices at various levels should finish all the formalities relating to the approval of project proposal, feasibility study, contract and articles of association followed by the issue of the business license within 15 working days after receipt of all the required documents.

Article 10 Those projects which are in line with the guiding policy and whose total investment is within provincial approval limits falling into the following categories will be registered directly. 1. solely foreign funded enterprises; 2. Equity joint venture and contractual joint venture enterprises with no state contribution; 3. Scientific enterprises encouraged by the state, export-oriented enterprises whose production and construction requires no provincial input. For the above-mentioned enterprises, the industrial and commercial administration should finish all the registration formalities within 5working days after receipt of all requires documents.

Article 11 The above-mentioned enterprises whose business requires operating permits will obtain their business license before applying for any permits.

Article 12 Any alterations to the major terms of contracts will be handled by the original approval departments, and must be finished within 15 working days after receiving all required documents. Those enterprises, which are registered directly, will have their alterations approved by directly approaching the original registration organization.

Article 13 Upon termination, foreign funded enterprises will go through liquidation procedures before submitting the termination for approval to the original departments. Those enterprises, which are registered directly, will have their termination approved by directly approaching the original registration organization.

Chapter 3 Protection of Rights and Interests of Foreign Funded Enterprises

Article 14 Within their scope of business, foreign funded enterprises are entitled to conduct their business activities independently. Personal rights and property of foreign investors and employees are protected under state laws.

Article 15 The patents, copyrights, trademarks, knowledge, confidential technology & business information, computer software and brand names of foreign investors are protected under state laws.

Article 16 Foreign funded enterprises must enjoy equal treatments in use of water, electricity, gas and telecommunications as well as from financial, insurance, legal, employment, consultancy, design and advertising services.
Article 17 Foreign funded enterprises may reserve in their bank account of foreign exchange from their operational income. They may also sell their foreign exchange income to the bank or buy from the foreign exchange pool in case of need. Foreign investors may remit their legitimate income abroad directly from their foreign exchange account or by buying designated banks.

Article 18 The family dependents of foreign investors and foreign employees enjoy equal rights to the residents of the province in public transportation, recreation, medical treatment, education and tourism.

Article 19 Unless required by law, foreign funded enterprises may make their own decision whether to join social organizations or participate in competitions, commendations, donations or sponsorship.

Article 20 Foreign funded enterprises are entitled to refuse unlawful inspections or other activities which may affect their daily operation. They are also entitled to refuse any extortion or sponsorship or fundraising. Apart from items for fees stipulated by the laws, regulations and provisions, no departments are permitted to charge other fees unless it is following Administrative Measures of Yunnan Province on the Fee Charging Card for Foreign Funded Enterprises.

Article 21 Should foreign funded enterprises consider their legitimate rights and interests to be infringed by the conduct of any government departments or staff, they may lodge a complaint with the Complaint Centre for Foreign Funded Enterprises. They may also apply for re-examination or file a law suit in the courts.

Chapter 4 Preferential treatment for Foreign Funded Enterprises

Article 22 Foreign Funded Enterprises concerned with energy, communication, water conservancy, environmental protection, agriculture, forestry and animal husbandry and other related industries with terms of operation longer than 10 years will be exempt from corporate tax for 2 years starting from the first profit-making year. These enterprises will receive a full tax rebate from the financial bureau for the third, fourth and fifth years of operation.

Article 23 Those foreign funded enterprises which have been approved as technologically advanced enterprises with terms of operation longer than 10 years will be exempt from corporate tax from the first profit-making year. They will receive a full corporate tax rebate from the financial bureau for the 3rd to the 7th year of operation. For the first three years of operation, the proportion of V.A.T signated to the local financial departments will be rebated by these departments. Upon expiry of the above mentioned preferential terms, favourable tax rates may still be obtained for enterprises which fulfill requirements from the provincial tax department.

Article 24 Foreign funded enterprises involved in energy, communication, environmental protection and urban public utilities whose actual investment exceeds 10 million dollars will have the proportion of their V.A.T. designated for the local financial departments rebated for the first 3 years of operation upon approval.

Article 25 Foreign funded enterprises reinvesting their profits in the province and their term of operation longer than 5 years, the local financial bureau will rebate corporate tax according to the amount reinvested.

Article 26 Foreign funded enterprises involved agricultural projects which don't encroach on farming land will be exempt from agriculture tax for the first three years. For the 4th and 5th years, the above taxes paid will be rebated by the local financial bureau.

Article 27 Foreign funded enterprises will be given priority in the allocation of land use rights. Allocation of these rights will be at the same price level for all enterprises (domestic or foreign ). Arrangements can be made to pay by installments if necessary. When foreign funded enterprises invest in Dormitory Housing Projects, they may sell 30% of the floor area at a higher profit margin.

Chapter 5 Regulations for Administrative Departments.

Article 28 All departments involved in approval, administration and providing services to foreign funded enterprises will have their working procedures open to public scrutiny. This includes contents of application documents, office hours, time limits for processing documents, itemized price lists, names and positions of personnel.

Article 29 When the foreign funded enterprises go through formalities for land use rights, city planning permission, design, provision of water, electricity and gas, telecommunications and fire prevention, the local construction administration bureau will be responsible for coordination. The following time limits apply: a. If the area of land required be within the approval limit of the province, the land use administration bureau will issue the Certificate of Approval of Land for Construction or Certificate of Land Use Rights within 5 working days. b. The City Planning Bureaus will issue planning permission for the land and the License to begin construction within 10 working days. c. Departments for provision of water, electricity and gas, telecommunications and fire prevention will approve and issue certificates within 5 working days.

Article 30 The economic and Trade commission at various levels will be responsible for coordination to resolve the difficulties arising from the operation of foreign of foreign funded enterprises.

Article 31 The provincial Foreign Affairs Office will be responsible for certifying the status of foreign experts working in foreign funded enterprises. The office should complete these formalities within 2 working days after receipt of required documents. Upon certification, Confirmation for Employing Foreign Experts and Foreign Expert Certificates will be issued.

Article 32 Government departments at various levels will strictly abide by the following stipulations: a. No inspections on penalties and punishment of foreign funded enterprises are allowed unless clearly stipulated by law and regulations. b. It is mot permitted for law enforcement departments to order the banks to transfer money of freeze band accounts of foreign funded enterprises and foreign investors unless stipulated by law. c. Not to use their privileges to appoint enterprises of institutional departments to monopolize operation or promote hidden monopolies and unethical competition. d. No infringement on the legal rights and interests of foreign funded enterprises is permitted.

Article 33 Staff of administrative departments must not divulge business secrets or information about foreign funded enterprises when performing their duties.

Article 34 The annual monitoring of foreign funded enterprises will be carried out by the departments in charge of foreign investment at various levels.

Article 35 The fees charged to foreign funded enterprises by administrative departments will be collected in accordance with relevant laws and regulations.

Article 36 The intermediary agencies should provide their services on the basis of honesty, impartiality, openness and free choice. Their charges and rates, which must be approved by the relevant departments, will be made open and they will bear the legal responsibility for the document they issue. Staff in these agencies should meet required qualifications.

Article 37 The government regulatory bodies at various level are responsible for overseeing the practices of the administrative departments. The complaint Center for Foreign Funded Enterprises should carry out its duty in accordance with the law to safeguard the legal rights and interests of foreign funded enterprises.

Chapter 6 Legal Obligations

Article 38 Foreign funded enterprises which violate the law or regulations will be punished.

Article 39 Any violation of the regulations herewith, in particular the case set out below, will result in the individual responsible and their superior receiving administrative punishment according to the severity of the consequences.
a. Illegal inspection of any foreign enterprise, b. Illegally appropriating money from foreign funded enterprises, c. Forcing foreign funded enterprise to buy particular products, d. Forcing foreign funded enterprise to pay toparticipate in training courses in order to reap a financial benefit, e. Appointing or covertly appointing intermediary agencies to foreign funded enterprises, f. Forcing foreign funded enterprises to contract out construction projects to particular corporations, g. Leaking business secrets and confidential information of foreign funded enterprises, h. Infringing on the personal or propriety rights of foreign investors, their employees and dependents, i. Other actions infringing on the rights and interests of foreign funded enterprises.
Any losses incurred by foreign funded enterprises will be compensated. Should the violation break the law, the individuals responsible will be prosecuted.

Article 40 Should foreign funded enterprises suffer losses due to false or undue services provided by the intermediary agencies, these agencies will compensate such losses. In serious cases, the responsible persons will be punished and their credentials revoked. Legal proceedings will be followed should the behavior break the law.

Article 41 The staff of government departments or their superiors who are guilty of negligence, abuse of powers engaging in favouritism, or bribery, infringing on the rights of foreign funded enterprises will receive administrative punishment from their respective departments or superiors. If their behavior breaks the law, they will be prosecuted.

Chapter 7 Appendix

Article 42 These regulations also apply to investment from enterprises and individuals of Hong Kong Special Administrative Region, Macao and Taiwan.

Article 43 The Yunnan Provincial Peoples Government is responsible for the interpretation of these regulations.

Article 44 These regulations will come into effect when they are issued.