1. The income tax for foreign-funded enterprise is 30 percent of their taxable income, productive foreign-funded enterprises shall enjoy an income tax levied at reduced rate of 24 percent.

2. A productive foreign-funded enterprise which is scheduled to operate for a period of more than 10 years shall be exempted from income tax for the first 2 year and allowed a 50 percent reduction of income tax from the third year to the fifth years, starting from the first profit-making year. A foreign-funded enterprise with advanced technology shall enjoy a 50 percent reduction of income tax for another three years after the period of tax exemption and reduction is expired. For an export-oriented enterprise, its income tax shall be reduced by 50 percent in any year in which the total value of its exported products amounts to over 70 percent of its total output value after the period of tax exemption and reduction is expired.

3. A foreign-funded enterprise of farming and forestry may be allowed 15 to 30 percent of income tax for another 10 years following the expiration of the period for exemption and reduction, upon the approval by the tax authorities of an application filed by the enterprise.

4. Knowledge or technology-intensive productive enterprise with a total investment of over USD 30 million and a long period to recoup, or projects in energy, transportation and construction, shall enjoy an income tax reduction of 15 percent.

5. The foreign investor in a foreign-funded enterprise who reinvest the share of profit, increase registered capital or reinvest as capital to set up another foreign-funded enterprise which is scheduled to operate for a period of more than 5years, may obtain a refund of 40 percent of income tax paid on the reinvested amount, upon the approval of tax authorities for an application filed by the said investor. The foreign investor who reinvests in building or expanding export-oriented enterprises or enterprises with advanced technology may, in accordance with stipulations of the State Council, obtain a total refund of the enterprise income tax that has already paid for the part of reinvestment.

6. Losses incurred by a foreign enterprise in a tax year may be carried over to the next year and offset against a corresponding amount from that year's income. Should the income in the subsequent tax year be insufficient to offset the said losses, the balance may be offset against income in successive years, but within a period of not exceeding 5 years.

7. When a foreign-funded enterprise starts production in the middle of a year and makes profit in the same year, but the actual producing period is less than six months, it may enjoy the income tax exemption and reduction from the next year.

8. The foreign investor in a foreign-funded enterprise shall be exempted from income tax for the profit he gets from the enterprise.

9. Exemption for payment of customs tariffs and import VAT shall be granted to foreign funded enterprises engaged in projects which are listed in the section of encouraged industries or the Restriction B section in the category of foreign funded enterprises or those enterprises importing equipment for production using the investment with the exception of the commodities listed in the category of non - exempt imported commodities.
10. The above article will be used as a reference for projects using loans from foreign governments and international financial organizations for import of production equipment for self use and the equipment provided by foreign investors.

11. Imported technology, accessories and spare parts for the contracted equipment that conform to the above mentioned projects will be exempt from payment of tariffs and import VAT.