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Additional rewards offered by local and provincial governments significantly increase the foreign buyers incentive package. They often become more generous together moves westward from the coastal provinces to the heavily populated interior, this allowing the foreign investor to profit on Chinas fierce domestic competition for foreign investment. There are national regulations, however, that are applicable to the tax incentives that a government is entitled to offer Foreign Invested Enterprises (FIEs), and if these limitations are exceeded by overenthusiastic local authorities they may be revoked by the national government (hopefully any such cancellation wouldn't apply retroactively to FIEs). 

Main Chinas Henan state serves as one example. Henan provides manufacturing-oriented FIEs full waivers of business tax and a many local administrative costs. More over, FIEs that are involved in technology transfer, growth, and related consulting are eligible for a full refund of business tax already paid. 

Local Tax Incentives Offered By Henan Land 

Production-Oriented Foreign Invested EnterprisesWaiver of charges and Local Tax for downtown extension, city design, water resources protection, gardening, and wall reconstruction. Exchange handling costs for buying production / operation sites will also be waived. 

R&D and companies centers working with technology transfer, development and services Certain income could be exempted from corporate income tax after approval. 

Municipal governments are generally a lot more generous compared to the provinces. Zhengzhou (a town of approximately 4 million in central China) is an excellent example. The following incentives are offered by zhengzhou to local FIEs: 

Tax Incentives for Reinvestment of Profits Locally - Local FIEs that reinvest their profits locally get a one month refund of the locally retained portion of Enterprise Income Tax paid on the reinvested profits (the national government has an much more generous refund of the nationally retained portion). 

Investment in Pillar Industries and State-owned Enterprises - Zhengzhou allows a 50% return for three years on the locally retained portion of Enterprise Income Tax already paid on foreign investment funds committed to specified pillar industries. In addition, it offers financial incentives for investing in provincially administrated state-owned enterprises. In order to decrease large layoffs, this motivation is increased if the FIEs holds a given portion of the enterprises original employees. 

Inward Remittance of Export Earnings - Zhengzhou offers cash payouts of 0.2% to 0.5% of every dollar of hard currency export earnings that is remitted inward (the best payouts are reserved for the export of technically advanced products). 

Matching Funds - Zhengzhou provides one-to-one matching funds for global market development funds of small to medium-sized exporting companies when they are supervised at the provincial level (whether a company is supervised at the provincial level or the national level depends how big is its investment - its Registered Capital; see examination and approval authority for details). 

Anti-Dumping Insurance - Zhengzhou will assist FIEs in giving an answer to antidumping attempts. In addition, it offers subsidies for expenses arising out of participation by exporters in antidumping reactions to the extent these projects are not already being sponsored by provincial or national authorities. It may look a little odd for a U.S. company to determine a company in China, get involved in a filed by the United States Of America for dumping its products, and be backed by the Chinese government for expenditures necessary to protect the lawsuit, but its possible. 

Interest Subsidy for Loans Secured by Tax Refund Accounts- Zhengzhou will subsidize an amount add up to 70% of the interest due on loans which are attached by a tax return account. If the FIE hasn't taken out such a loan, Zhengzhou provides a subsidy add up to 50% of the interest that could have been paid on such a had it been taken out it will also provide the account from which the interest is subsidized. Corporations that have an annual export amount of at the very least US$5,000,000 in the previous year and are approved by the National Tax Bureau to have an elevated tax return due for the current year will be given a 100% subsidy. 

Export Incentives - An export enterprise with either (ii) an export volume of at least US$10,000,000 and real export volume of at least 25% more than the previous year, or (ii) annual export volume of at least US$5,000,000, a growth in export volume of more than 40% over the previous year, and inward remittances from exports at least 80% of sales volume, will soon be named a Zhengzhou Advanced Foreign Exchange Generating Export Enterprise and given a 30,000 RMB reward (about $3,500 US dollars) provided that it's perhaps not committed critical regulatory violations during the year preceding the award. 

Basic Tax Rate - The nationally-mandated basic Enterprise Income Tax charge for foreign invested enterprises is thirty three percent, including an a few months surcharge that is kept by local authorities. However, since Zhengzhou has been classified by the national government as a open to business and foreign investment, the Enterprise Tax charge of production-oriented FIEs located within the city is paid down to two years. Furthermore, because the Zhengzhou Economic & Technical Development Zone (an park located within urban Zhengzhou) has been given as a Economic & Technical Development Zone, the Enterprise Income Tax charge for production-oriented FIEs located therein has been further reduced to only 15%. [http://www.digitaljournal.com/pr/1137239 jt foxx]