1. Business tax: Business tax will be exempted for the income gained by foreign-invested enterprises, research and development centers established with foreign investment, foreign enterprises and foreign individuals from the transfer and development of technology as well as other related businesses such as technical consultation and services (from (1999) C.S.Z. Circular 273).

2. Enterprise income tax: Enterprise income tax imposed on a foreign-invested enterprise may be reduced to a rate of 15% after it has been identified as a high-tech enterprise; Unless otherwise specified by the State Council treasury or the competent tax departments, if the eligible advertising expense and business promotion cost incurred by an enterprise has not exceeded 15 percent of the sales (business) revenue of the same year, it may be deducted; and the amount exceeding the prescribed 15% can be carried over to future tax years for deduction.

3. Tariff and import value-added tax:for foreign investment projects which fall into the encouraged category or the restricted category B defined in the Catalogue for the Guidance of Foreign Investment Industries, tariff and import value-added tax will be exempted for imported self-use equipment with an amount under the aggregate investment, excluding the commodities listed in the Catalogue of Taxable Imported Equipment Used for Foreign Investment Projects. Tariff and import linkage tax will be exempted for imported raw materials and components required by foreign-invested enterprises for the production of export products.

4. Tax preferences for imported equipment: For foreign investment projects which fall into the encouraged category or the restricted category B defined in the Catalogue for the Guidance of Foreign Investment Industries and transfer technology, tariff and import value-added tax will be exempted for imported self-use equipment and its supporting technology, accessories and spare parts with an amount under the aggregate investment, excluding the commodities listed in the Catalogue of Taxable Imported Equipment Used for Foreign Investment Projects. Tariff and import linkage tax will be exempted for imported self-use equipment used for projects with loans from foreign governments and international financial organizations as well as imported equipment which is not priced and provided by the processing trade foreign businessman, excluding the commodities listed in the Catalogue of Taxable Imported Equipment Used for Foreign Investment Projects.

5. Tax refund for reinvestment: Foreign investors of foreign-invested enterprises may directly reinvest the profits gained from the enterprises into such enterprises to increase the registered capital, or use the profits as capital to establish new foreign-invested enterprises. In case the business term of such enterprise is no less than five years, the investor may, upon approval of the application by the tax authority, get a 40% tax refund of the income tax paid on the reinvested amount. Investors who reinvest to establish and expand the export-oriented enterprises or technologically advanced enterprises may obtain a full refund of the enterprise income tax paid on the reinvested amount.