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The State Council
Interim Provisions of the State Council of the People’s Republic of China on Preferential Treatment for Port and Terminal Development
Projects Financed by Chinese and Foreign Joint Ventures
GuoFa [1985] No.118
September 30, 1985
Article 1
These Provisions are formulated to promote the economic cooperation and technical interchange between China and foreign countries
and to speed up the development of ports and terminals, in order to keep in line with the needs of the socialist modernisation of
this country.
Article 2
In jointly financing port or terminal projects within the territory of the People’s Republic of China through the establishment of
joint ventures with Chinese partners, foreign corporations, enterprises or individuals involved (hereinafter referred to as foreign
partners) shall, besides abiding by the laws and statutes of regulations pertaining thereto, be enpost_titled to preferential treatment
in accordance with the provisions of these Provisions, in view of the fact that such projects are usually capital intensive and time
consuming in nature and the rate of return is low.
Article 3
Joint ventures heretofore referred to may operate for a fairly long term, for instance over 30 years, the actual time period being
subject to consultation and agreement between the parties. Upon expiration of the term of operation, an extension of such a term
can be applied for if the parties so desire and, after the application has been duly submitted and approved by the Ministry of Foreign
Economic Relations and Trade or other bodies designated thereby for this purpose, the extension will be granted.
Article 4
The said joint ventures may recover their investment by accelerating the depreciation of the fixed assets upon application by the
parties involved, and the same shall be granted after being examined and endorsed by the taxation authorities and approved by the
Ministry of Finance of the People’s Republic of China.
Article 5
Exemption from customs duties and consolidated commercial-industrial tax can be obtained with respect to joint ventures importing
materials, cargo handling facilities, transportation equipment and other devices or appliances for terminal construction purposes,
provided that the expenses incurred have been covered by and kept within the limit of the gross investment of the project.
Article 6
15% income tax shall be levied on and paid by the joint ventures heretofore referred to. However, newly established joint ventures
with a term of operation of 15 years or more shall, counting from the first profit-yielding year, be exempted from income tax for
the first through the fifth year of operation, and be enpost_titled to a 50% reduction of such income tax for the fifth through the tenth
year of operation, upon application to and approval by the taxation authorities of the provinces, autonomous regions or municipalities
directly under the Central Government where such joint ventures are located.
Upon the approval of the Ministry of Finance of the People’s Republic of China, the term of exemption from or reduction of taxation
referred to in the preceding paragraph can be further extended, as appropriate, in favour of joint ventures having difficulty paying
such tax after such term has expired.
Any exemption from or reduction of local income tax levied on joint ventures, if so justified, shall be determined by the respective
governments of the provinces, autonomous regions or municipalities directly under the Central Government where such joint ventures
are located.
Article 7
Foreign partners of joint ventures remitting outside China their profit gained from the operation of joint ventures shall be exempted
from income tax.
Article 8
The rates and tariffs for stevedorage and other related charges pertaining to joint-ventured ports and terminals shall be fixed by
the joint ventures themselves and filed with the departments in charge and the local price authorities for record.
Article 9
Where the foreign partners of a joint venture reinvest in new joint-ventured berths or terminals for a term not less than five years
with their profit earned through the operation of such a joint venture, a 40% refund of the amount of tax already paid on account
of such reinvestment shall be granted upon application by such foreign partners and approval of the taxation authorities.
Article 10
The said joint ventures may concurrently engage in other business items calling for less capital investment, shorter periods of construction
and yielding higher rates of profit gains. Matters pertaining thereto shall be handled pursuant to the relevant rules and regulations
currently in force.
Article 11
These Provisions shall be applied mutatis mutandis to corporations, enterprises or individuals from Hong Kong or Macao making investments
in joint ventures for port and terminal development projects in the People’s Republic of China.
Article 12
These Provisions shall enter into force as of the date of promulgation.
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