Regional tax preference refers to the preferential treatment enjoyed by specific regions relative to general regions according to national laws. Due to the promulgation of the “Regulations for the Implementation of the PRC Enterprise Income Tax Law” the preferential policies of income tax will be uniformly applied to domestic and foreign-funded enterprises. Therefore, the regional tax preference has become one of the most concentrated areas in China's current tax preferential provisions.
Shanghai pilot free trade zone (hereinafter referred to as "Shanghai free trade zone") is a regional free trade zone established by the Chinese government in Shanghai. It is located in Pudong and belongs to the category of China free trade zone. On September 29, 2013, China (Shanghai) pilot free trade zone was officially established, covering an area of 28.78 square kilometers, covering four special customs supervision areas, including Shanghai Waigaoqiao Free Trade Zone, Waigaoqiao Bonded Logistics Park, Yangshan Bonded Port Area and Shanghai Pudong Airport comprehensive bonded zone. On December 28, 2014, the Standing Committee of the National People's Congress authorized the State Council to expand the area of China (Shanghai) pilot free trade zone to 120.72 square kilometers.
The great convenience of preferential import and export policies is also a major feature of Shanghai pilot free trade zone.
There are several preferential policies for import.
Free Import | 1. For domestic leasing companies registered in the test area or their project subsidiaries, with the approval of relevant state departments, purchase aircraft with an empty weight of more than 25 tons from abroad and lease them to domestic airlines for use, they shall enjoy the specified preferential policies of value-added tax. 2. Import value-added tax and consumption tax shall be levied on the goods produced and processed by enterprises located in the pilot zone and sold to the mainland through the "second-line" mode. According to the application of the enterprise, the policy of levying tariff on the domestic sales goods shall be implemented according to the corresponding imported materials and parts or according to the actual inspection status. 3. Under the current policy framework, the machinery, equipment and other goods imported by production enterprises and producer service enterprises in the experimental area shall be exempted from tax, except for the goods imported by living service industries and other enterprises as well as the goods that are definitely not exempted from tax according to laws, administrative regulations and relevant provisions. 4. Under the premise of strictly implementing the tax policy of goods import, it is allowed to set up bonded display and trading platform in specific areas. |
Leasing of Imported Aircraft | 1. Since August 30, 2013, the import value-added tax will be reduced by 5% for passenger and freight aircraft imported by domestic airlines engaged in air transport industry and those imported and leased to domestic airlines by leasing companies or project subsidiaries set up by leasing companies in special customs supervision areas. For the above-mentioned aircraft that have been imported before, if the tax is declared to be paid in installments on or after August 30, 2013, the import value-added tax shall also be reduced by 5%. 2. The customs directly under the locality of the enterprise concerned shall be responsible for the examination and approval of tax reduction or exemption for the above-mentioned imported aircraft. The competent customs shall issue the “Certificate of The Customs of The People's Republic of China on The Collection and Exemption of Import and Export Goods”, which shall be used by the customs at the place of import to handle the import procedures for duty reduction or exemption. 3. Before August 30, 2013, the Customs has issued the "Tax Collection And Exemption Certificate" for the above-mentioned imported aircraft, but the aircraft has not been declared for import, the "Tax Collection And Exemption Certificate" will be invalid, and the "Tax Collection And Exemption Certificate" will be issued again in accordance with this notice and relevant regulations. |
Bonded Display Transaction | 1. Bonded display transaction refers to the business activities of enterprises in the test area registered by the customs to carry out bonded display transactions within or outside the test area. 2. The enterprises in the bonded Exhibition Trade Zone shall establish a computer management system that meets the requirements of customs supervision, be able to connect with the customs supervision information system of China (Shanghai) pilot free trade zone through the data exchange platform or other computer networks in accordance with the certification methods prescribed by the customs, and submit relevant data that can meet the requirements of customs supervision to the customs. 3. If the enterprises in the zone carry out bonded exhibition trade in the Experimental Zone, the competent customs of the Experimental Zone shall supervise the goods in accordance with the relevant provisions of the special supervision area of the customs. 4. Enterprises in the zone shall provide full tax guarantee if they need to carry out bonded exhibition trade outside the comprehensive office area within the planning area of the experimental zone and in the special exhibition places outside the comprehensive office area and other places outside the zone. The enterprises in the zone shall go through the procedures of goods display at the customs in charge through the information system, and submit the following materials: a) Exhibition contract, agreement, invitation letter or booth confirmation and other supporting documents； b) List of goods displayed outside the area； c) Security deposit or guarantee； d) Other materials deemed necessary by customs. 5. Where the enterprises in the zone carry out bonded exhibition transactions outside the zone, they shall strictly manage the displayed goods and shall not use them for other purposes other than exhibition activities. In case of bonded display in the comprehensive office area, the enterprises in the area shall submit to the customs every 14 days the detailed records of sales and inventory of the displayed goods and the storage location; if the bonded display is carried out in other places outside the area, the enterprises in the area shall submit the report every day. After the goods are displayed out of the area, the enterprises in the area shall go through the procedures of returning the goods to the area through the information system, and the longest time shall not exceed 6 months from the date of the goods leaving the area. If the time limit needs to be extended due to special circumstances, the enterprises in the area shall go through the extension formalities with the competent customs, and the extension shall not exceed three times, and each extension shall not exceed six months. At the end of the extended period, it shall be transported back to the region or go through the formalities of import tax collection. 6. If the goods are sold domestically during the period of exhibition outside the area, the enterprises in the area shall submit the following materials to the competent customs and go through the formalities of import tax collection: a) Domestic bonded display goods list； b) Invoice； c) Permit (for goods involved in the permit)； d) Other materials deemed necessary by customs. If centralized declaration is required, the enterprises in the area shall, within 30 days from the date of domestic sales, handle centralized import tax collection procedures with the competent customs, and the centralized declaration shall not be handled beyond the year. 7. If the goods are turned into duty-free goods during the period of exhibition outside the zone, the enterprises in the zone shall go through the customs formalities with reference to the “Measures of The Customs of The People's Republic of China on The Supervision of Duty-Free Shops and Duty-Free Goods”. Where centralized declaration is required, the enterprises in the area shall go through the centralized declaration procedures with the competent customs within 30 days from the date of turning into duty-free goods. 8. If the goods are damaged or lost due to force majeure during the exhibition period out of the zone, the enterprises in the area shall report to the competent customs in time and submit the certificates issued by the relevant departments. If the goods are damaged due to the force majeure, the enterprises shall go through the re transportation procedures; if the goods are lost due to force majeure, they shall go through the verification procedures of the competent customs. If the goods are damaged or lost due to force majeure, the enterprises in the area shall go through the customs procedures in accordance with the relevant provisions on the import of goods. In case of any of the following circumstances, the competent customs shall suspend the goods exhibition business out of the zone： a) Do not meet the conditions for business development； b) Suspected of smuggling or import and export of goods infringing intellectual property rights and put on record by the Customs for investigation； c) Where the customs consider it necessary to suspend other illegal acts. The competent customs shall determine whether to resume the business according to the actual situation after it meets the conditions for business development or the investigation is completed. |
