In May, 1984, PRC first designated the following 14 coast port cities as -open cities": Beihai, Dalian, Fuahou, Guangzhou, Lianyungang, Nantong, Ningbo Qianhuandao, Qingdao, Shanghai, Tianjin, Wenzhou, Yantai (including Weihai), and Zhanjiang.

In 1992, PRC further approved the following cities as open cities:

1. Along the Yangtze River.-

Chongqing, Huangshi, Jiujiang, Wuhan, Wuhu, and Yueyang.

2. Provincial capital cities in border areas:

Changchun, Harbin, Huhehot, Kunming, Nanning, Shijiazhuang, and Wulumuqi.

3. Provincial capital cities in inland areas-

Changsha, Chengdu, Guiyang, Hefei, Lanzhou, Nanchang, Taiyuan, Xi'an, Xining, Yinchuan, and Zhengzhou.

In addition, the following 13 cities in border areas were also authorized to open:

Bole Municipality, Dongxing Town, Erlianhaote Municipality, Heihe
Municipality, Hekou County, Huichun Municipality, Manzhouli Municipality,
Pingxiang Municipality, Ruili County, Suifenhe Municipality, Tacheng
Municipality, Wanding Municipality, and Yining Municipality.

Foreign invested enterprises in open cities may enjoy the following.-

1. In general, enterprises are eligible for a flat corporate income tax rate of 24%. Certain types of enterprises may be exempt from the VAT and Commercial Taxes.

2. Enterprises may enjoy a reduced tax rate of 15% if:

a. the project is technology-intensive or knowledge-intensive;

b. they engage in construction of ports and wharfs;

C. they are financial institutions with investments of US$l 0 million or more, and their operation periods are 1 0 years or longer;

d. the total investment is US$30 million or more.

3. Export-oriented enterprise with annual export value greater than 70% of its yearly production output is eligible for a reduced tax rate of 12%.

4. Enterprises with long-term (1 0-year or more) operation periods may be tax-free for the first two profitable years and the corporate income tax may be reduced in half for the next three years. High-tech enterprises may enjoy this reduced income tax for three more years.

 

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