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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
Brand Hong Kong - Asia world city
MY COLOUR

Commercial Information Circulars

24-hour hotline : 23 922 922

e-mail address : enquiry@tid.gov.hk

Ref : EIC 631/2/8

16 January 2003

Dear Sirs,

 

Commercial Information Circular No. 21/2003

The Mainland of China :Notice on Strengthening the Administration of Foreign-Invested Enterprises

The Ministry of Foreign Trade and Economic Cooperation, the State Administration of Taxation, the State Administration for Industry and Commerce, and the State Administration of Foreign Exchange jointly promulgated the "Notice on Strengthening the Administration of Foreign-Invested Enterprises", which took effect from 1 January 2003.

  1. According to existing laws and regulations governing foreign investment in the Mainland, foreign investors should normally provide no less than 25% of the total capital in Chinese-Foreign equity joint ventures and Chinese-Foreign contractual joint ventures. The Notice sets out that foreign-invested enterprises with foreign investment less than 25% of the total capital, except otherwise provided in relevant laws and regulations, will not be able to enjoy tax exemption or reduction for import of self-used equipment and materials under the capital amount, as well as other tax benefits available to normal foreign-invested enterprises.
     

  2. The Notice also regulates the approval procedures and settlement period of acquisition of Mainland enterprise by foreign investors. When such acquisition takes place, the Mainland enterprise should re-register as a foreign-invested enterprise according to established rules and regulations. Foreign investors should settle their contributions within 3 months from the issue date of the foreign-invested enterprise's operating license. Under special circumstances and subject to approval, foreign investors may extend the settlement period such that they settle more than 60% of their total contributions within 6 months from the issue date of the operating license and settle the rest within a year.
     

  3. The Notice is attached at Annex for reference.

 

ENQUIRIES

 

  1. If you have any questions on the content of this circular, please contact Ms Eugenia CHAN at 2398 5444.

 

Yours faithfully,

 

(Miss Cindy CK CHENG)

for Director-General of Trade and Industry



Note : While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.