（Promulgated¹ by the Shanghai Municipal People's Government on 10 September 1990.）
颁布日期：19900910 　实施日期：19900910 　颁布单位：上海市人民政府

　　Article 1　These Provisions are formulated² in accordance with the decision of the State Council to develop and open up Pudong， and in accordance with relevant State laws and regulations， in order to better attract investment by foreign businesses and to accelerate the construction of the Pudong new Area of Shanghai （hereafter， the “New Area”）

　　Article 2　Foreign companies， enterprises and other economic organizations or individuals （hereafter referred to as “foreign investors³”） are encouraged to establish the following types of Sino-foreign equity⁴ joint⁵ ventures， Sino-foreign co-operative joint ventures and wholly foreign-owned enterprises （hereafter， “foreign investment enterprises”）， and shall be granted preferential treatment：

　　1. Production-oriented foreign investment enterprises， especially export-oriented enterprises， especially export-oriented enterprises and advanced-technology enterprise；

　　2. Foreign investment enterprises that， in accordance with the consolidated⁷ plan of the New Area， invest in the development of， and conduct business on， large tracts⁸ of land， in conjunction with other projects on such land； and

　　3. Foreign investment enterprises that engage in construction projects for [the development of energy resources] and communications.

　　Article 3　Foreign investors shall be allowed to invest in and establish tertiary industries in the New Area. However， where foreigners invest in or establish enterprises such as financial enterprises and commercial retail⁹ enterprises， a report must be submitted to the State Council for approval.

　　Article 4　A bonded¹⁰ zone shall be established in the New Area. Subject to the approval of the competent department of the State Council， foreign investors shall be permitted to establish trade organizations in the bonded zone to engage in entrepot trade or to act as the agents of foreign investment enterprises in the zone for importing raw materials and spare parts used in their production for exporting their products.

　　Article 5　Where production-oriented foreign investment enterprises obtain income from production， business operations or other sources， the Enterprise Income Tax on such income shall be levied¹¹ at the reduced rate of 15 per cent. Upon applying to and receiving approval from the tax authorities， such enterprises with a term of operation of not less than 10 years shall， commencing from their first profitable year， be exempt¹² from Enterprise Income Tax for the first and second years and enjoy a 50 per cent reduction in Enterprise Income Tax for the third through fifth years.

　　Upon the expiration¹³ of the period of Enterprise Income Tax exemptions¹⁵ and reductions provided for in State regulations， export-oriented enterprises the value of whose export products in any given year reaches 70 per cent or more of the total value of the enterprise's products in that year may pay Enterprise Income Tax at the reduced rate of 10 per cent. Upon the expiration for the period of Enterprise Income Tax exemptions and reductions provided for in State regulations， enterprises may pay Enterprise Income Tax at the reduced rate of 10 per cent for another three years.

　　Foreign investment enterprises that are engaged in energy or transportation construction projects such as the construction of airports， ports， railways， roads or power stations may pay Enterprise Income Tax at a reduced rate of 15 per cent. Upon applying to and receiving approval from the tax authorities， where such enterprises have at a term of operation of not less than 15 years， they shall， commencing from the first profit-making year， be exempt from Enterprise Income Tax for the first through fifth years， and enjoy a 50 per cent reduction in Enterprise Income Tax from the sixth through tenth years.

　　Article 6　Foreign investors may invest in the development of large tracts of land in the New Area in accordance with a consolidated plan [for development]， and may engage in the development of infrastructure¹⁶ facilities projects and real estate business on such land.

　　Upon applying to and receiving approval from tax authorities， foreign investment enterprises engaged in the construction of infrastructure facilities together with other projects on large tracts of land may be granted preferential tax treatment in accordance with the first paragraph of Article 5 of these Provisions.

　　Article 7　Upon applying to and receiving approval from the tax authorities， financial institutions such as wholly-foreign owned banks， Sino-foreign equity joint venture banks and finance companies， with capital invested in accordance with regulations， and branches of wholly foreign-owned banks with working capital allocated¹⁷ by their head offices exceeding US$10 million may pay Enterprise Income Tax at a reduced rate of 15 per cent on their income from business operations. Such institutions shall also be exempt from Enterprise Income Tax during their first profitable year， and enjoy a 50 per cent reduction in Enterprise Income Tax during the second and third years after becoming profitable， provided that their term of operation is not less than 10 years and that their invested capital or working capital is not reduced within a 10 year period.

　　Article 8　Financial institutions such as wholly foreign-owned banks， branches of wholly foreign-owned banks， and Sino-foreign equity joint venture banks and finance companies shall pay Consolidated Industrial and Commercial Tax at the rate of three per cent on revenue derived¹⁸ from their loan business and at the rate of five per cent on revenue derived from their other financial business.

　　Article 9　Where foreign investors reinvest their share of enterprise profits back into their enterprises or use such funds to invest in other foreign investment enterprises， or to establish new foreign investment enterprises with terms of operation of not less than five years， such investors shall be refunded¹⁹ 40 per cent of the Enterprise Income Tax already paid on the reinvested portion. Foreign investors who reinvest their profits in the establishment or expansion of export-oriented enterprises or advanced-technology enterprises with terms of operation of not less than five years shall be refunded all of the Enterprise Income Tax already paid on the reinvested portion.

　　Article 10　Foreign investors in Sino-foreign equity joint ventures shall be exempt from income tax on the remittance²⁰ out of the People's Republic of China of their shares of the profits of the enterprises.

　　Article 11　Foreign investors without establishments in the People's Republic of China shall pay income tax at the reduced rate of 10 per cent on dividends²¹， interest， rentals²²， royalties²³ and other income derived from the New Area， except where such income is exempt from income tax by law. Investors that provide funds or equipment on favourable²⁴ terms or transfer advanced technology may be granted more preferential reductions or exemption¹⁴ upon approval by the Municipal People's Government.

　　Article 12　Foreign investment enterprises in the New Area shall be exempt from local income tax until the end of the year 2000.

　　Article 13　New buildings in the New Area built or purchased by foreign investment enterprises for their own use shall be exempt from real estate tax for five years after the month when construction is completed or the purchase is made.

　　Article 14　The export products of foreign investment enterprises， with the exception of crude oil， refined oil and products subject to separate State regulations， shall be exempt from Consolidated Industrial and Commercial Tax.

　　Article 15　Export products produced by foreign investment enterprises in the New Area， with the exception of products subject to separate State regulations， shall be exempt from customs duties.

　　Article 16　Construction materials， production and management equipment and their spare parts， vehicles， office supplies， and raw and auxiliary²⁵ materials for production imported by foreign investment enterprises for their own use shall be exempt from customs duties and Consolidated Industrial and Commercial Tax.

　　Where foreign investment enterprises import materials and parts for processing such as raw and auxiliary materials， spare parts and components²⁶ free of duties and tax， and later sell the products on the domestic market instead of exporting them， such enterprises shall pay Customs Duty and Consolidated Industrial and Commercial Tax retrospectively on such materials and parts. Where the import of materials or parts is restricted by the State， an application for import licenses²⁷ shall be made retrospectively to the relevant competent departments.

　　Article 17　Household items and vehicles brought into the country in reasonable quantities by foreign personnel of foreign investment enterprises shall be exempt from Customs Duty and Consolidated Industrial and Commercial Tax.

　　Individual Income Tax on the income from wages and salaries of foreign staff and workers shall be reduced by 50 per cent.

　　Article 18　Machinery²⁸， equipment， vehicles and goods and materials for capital construction necessary for construction in the New Area shall be exempt from Customs Duty and Consolidated Industrial and Commercial Tax.

　　Article 19　Foreign investment enterprises shall not be required to apply for approval or to obtain import licenses for machinery， equipment， vehicles for use in production， raw materials， fuel， knock-down parts， spare parts， components and fittings （including those the import of which is restricted by the State） required for the performance of their export contracts. Such imports shall be supervised and controlled by Customs and examined and released on the strength of the enterprise contracts or import and export contracts.

　　Article 20　Foreign investment enterprises may sell on the domestic market a portion of the import substitutes they produce， upon approval by the relevant competent department and after retrospective payment of Customs Duty and Consolidated Industrial and Commercial Tax in accordance with regulations. Where necessary， foreign exchange may be charged for a portion of such products.

　　Article 21　Where foreign investment enterprises require short-term working capital loans in the course of production and operation， they shall be given priority in obtaining such loans， upon examination and verification by the bank with which they have opened accounts or other financial organizations.

　　Article 22　The foreign personnel of foreign investment enterprises may apply for multiple entry and exit visas as needed.

　　Article 23　Foreign investment enterprises may determine their organizational structure and staffing at their own discretion²⁹， according to their production and operational needs. The staff and workers required by such enterprises may be recruited from within Shanghai Municipality or， upon approval by the Municipal Labour and Personnel Department， from outside Shanghai Municipality. The original work units of staff and workers hired within the municipality shall cooperate and allow the transfer of such staff and workers. Disputes shall be mediated³⁰ and arbitrated by the Labour and Personnel Department.

　　The labour contract system shall be implemented³¹ for the staff and workers of foreign investment enterprises.

　　The employment， recruitment and dismissal or discharge of staff and workers by foreign investment enterprises shall be recorded with the municipal labour and personnel department.

　　Article 24　Foreign investment enterprises shall， at their own discretion， decide on the wage scales， forms of wages， and systems of bonuses and allowances to be used for their employees.

　　Article 25　Upon examination and verification by the Shanghai Municipal Foreign Investment Commission and approval by the Shanghai Municipal People's Government， foreign investors investing in projects in the New Area that are specially⁶ encouraged by Shanghai may be granted special preferential treatment.

　　Article 26　Enterprises and projects invested in and established by companies， enterprises and other economic organizations or individuals from Hongkong， Macao and Taiwan shall be governed with reference to these Provisions.

　　Article 27　Matters that are not dealt with in these Provisions shall be handled in accordance with the relevant laws， regulations and rules of the State and Shanghai Municipality.

　　Article 28　The Shanghai Municipal Foreign Economic Relations and Trade Commission and the Shanghai Municipal Foreign Investment Commission shall be responsible for interpreting these Provisions.

　　Article 29　These Provisions shall be implemented as of the date of their approval and promulgation³².