ChengDu Hi-Tech Industrial Development Zone

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Frequently Asked Questions

 

Can the telecom infrastructure in Chengdu guarantee communications with oversea nodes?

 

As one of the eight major telecom hubs in China, Chengdu has laid 560 km of optical cable with a total Internet bandwidth of 3200G and MAN exit bandwidth of 100G. By 2010, total bandwidth will reach 8000G, with MAN exit of 450G and an oversea access of 200G. The telecom infrastructure can fully guarantee the connection with oversea nodes.

 

What is the turnover rate of Chengdu's IT industry? Is there any limitation on the use of contract laborer?

 

The turnover rate of Chengdu's IT industry is 5-8%.

According to the Labor Law of the People’s Republic of China, enterprise shall sign labor contract with and buy social security for the laborer for establishing employment relationship. The term of a labor contract shall be divided into fixed term, flexible term or taking the completion of a specific amount of work as a term.

Enterprise shall have the right to determine the time, mode, conditions and amount for recruitment. Within 30 days since the completion of recruitment, labor contract shall be signed between the employer and employee.

According to the Labor Law of the People's Republic of China, a labor contract may be revoked:

• Upon agreement reached between the parties involved through consultation; or

• The labor to be proved not up to the requirements for recruitment during the probation period;

• To seriously violate labor disciplines or the rules and regulations of the employing unit;

• To cause great losses to the employing unit due to serious dereliction of duty or engagement in malpractice for selfish ends; and

• To be investigated for criminal responsibilities in accordance with the law.

 

What is the standard for the certification of software enterprises?

 

The current certifying standard is as follows:

• The enterprise is established within China according to relevant laws;

• The business and major income are technical service such as computer software development and production, system integration, application, etc.;

• The enterprise develops one or more software products or possesses intellectual property right of the products, or provides technical services such as computer information system integration that has passed qualification and grade certification.

• The proportion of technical staff in the work of software development and technical service shall not be lower than 50% of the total staff in the enterprise;

• It has technical equipment and premises essential for software development and relevant technical service;

• It has measures and capability to safeguard the quality of software and services;

• The development fund for software technique and products shall amount to over 8% of the enterprise's annual software income;

• The annual sale income of software shall be over 35% of the total annual income of the enterprise, with the income of self-developed software amounting to over 50% of the software sales income;

 

How can an enterprise enjoy business tax exemption for its income from technical transfer, technology development, the relevant consultation and other technical services?

 

It shall submit its contract for technical transfer, technology development, the relevant consultation and other technical services to Chengdu Municipal Bureau of Science and Technology for examination. Upon approval, the enterprise may enjoy business tax exemption.

 

What are the differences between policies for enterprises within and outside EPZ?

 

 

EPZ

Outside EPZ

Management
Mode

Custom, Inspection and EPZ committee provide customs clearance services 24 hours a day, 7 days a week through fenced, gantry gate management system.

Custom provides routine services 8 hours a day, 5 days a week.

 

Contract Management

Filing and modification of Processing contract only need be approved by EPZ Committee in one step and procedure.

Filing and modification of Processing contract should be approved by departments of Commerce, Taxation, Custom and Banks, through more than 10 steps.

Supervision Mode

Company executes clearance through E-port system and paper-free, declared on factory site, then gantry-gate releases cargo automatically for approved goods.

A paper-based manual registration and bank guarantee deposit management system executed for each individual contract.

Customs Clearance

Clearance by competent customs department: One-time declaration, one-time examination and one-time inspection for cargo import and export.

Across-location Customs declaration or entrepot transportation are adopted in cargo import and export.

Supervision Measures

Enterprises-competent customs-port customs are integrated into a network.

Manual supervision is adopted.

Verification

of

materials

The verification and cancellation are handled every half year in a synchronous-updating  manner.

Verifying contracts one by one, each taking 60 days.

Tax

Refund

Policies

For domestic purchases, custom declaration is handled the same way for ordinary exportation and vendors can apply for tax refund based on proper vouchers.

For domestic raw material and other material used by processing company for manufacturing products, the tax refund can only be declared after the processed products are exported offshore.

Domestic

Tax

Polices

Services and products manufactured or provided inside EPZ for exportation, VAT and consumption taxes shall be exempted

Companies outside EPZ shall pay for VAT and consumption taxes according to tax regulation.

Products

Sale

Domestically

For products sold to domestic area from EPZ, VAT shall be paid by the domestic purchaser at a rate of 17%.

Companies outside EPZ shall pay for VAT at a rate of 17% for products.

Tariff

and

VAT

Policies

Imported machinery, facilities, moulds and spare parts for production; imported machinery, equipments necessary for construction of productive infrastructure facilities; construction materials for factories and warehouses; office equipment used by the enterprise in a reasonable amount are tax bonded.

Raw materials, packaging materials and consumables for manufacturing export products are tax bonded.

Water, power and gas consumed by the enterprise for manufacturing export products are qualified for tax refund of 13%.

Companies outside EPZ shall pay for Tariff and VAT (17%) according to tax regulation based on the imported raw materials and equipments, and the paid VAT could be deducted when selling of final products.

Local vendors shall qualify for VAT refund based on a scheme of exemption, deduction and refund.

Water, power and gas consumed are not qualified for tax refund.

 

Note:

1) Companies that manufacture products for export can enjoy the incentives of EPZ after obtaining ratification of EPZ Administration and registration formalities of Customs. The commercial retail, common trade, entrepot trade and other outlying operations are not permitted to operated inside EPZ

2) The Customs supervision of EPZ is conducive for efficient cargo import & export, enhancing capital turnover.

3) The tariff and VAT policies inside EPZ can reduce the capital use and lower the construction cost for enterprises

4) Products manufactured by companies inside EPZ can be sold to domestic market through formalities below :

   4.1) Products can be sold to domestic market directly after approved by EPZ and Chengdu custom with no restriction on the selling portion according to current law and regulation. VAT shall be paid by domestic purchaser at a rate of 17%.

   4.2) Company inside EPZ can set up a branch office or legal entity company inside Chengdu Bonded Logistics Park (BLP) to transfer products to BLP and sell to domestic market without approval of EPZ. VAT shall be paid by domestic purchaser at a rate of 17%.

BLP is a special area supervised by Customs, situated at the west park of Chengdu Hi-tech Zone. The BLP can function as bonded warehousing, international distribution, value-added processing, import/export trade, transit trade and import/export Customs-clearance.

By BLP, domestic and overseas market can be connected. BLP could be a logistic hub for goods delivering and storage with comprehensive service functions. Besides, BLP is able to process logistic information and consultation.

BLP is authorized to perform as a customs port where companies may directly declare to the Customs of the BLP with cargo ready for both domestic and international markets; Cargo transfer into BLP is considered as exportation, qualified for export tax refund at the time of entering the BLP; Tax bonded shipment into the BLP for overseas cargo; For cargo inside the BLP sold to domestic market, companies may declare to the Customs for custom formalities based on the actual transaction method.