After the initiation of the foreign-funded enterprises which are established legally with the authorization of related governing organizations, the enterprises of “two-type status”, namely export enterprises and technologically advanced enterprises, can apply for the confirmation and authorization by the verifying institutions provided that they are in accordance with the requirements listed as follows:

I. Requirements for application

1. Enterprises complying with the following requirements can apply for the confirmation of the status ofexport enterprises:

(1) The foreign-funded enterprises are engaged in the production of export products;

(2) The products are mainly for export, regardless of whether produced by the manufacturers or the agency of trading companies entrusted by the manufacturers. The gross sales of export should amount for more than 50% of total sales in the same year.。

(3) Enterprise realizes a balance between the earnings and expenditures in the foreign exchange or with a surplus (A favorable balance of payments in foreign exchange of a calendar year refers to greater foreign exchange earnings than expenditures within the same year, excluding the amount carried over from the previous year.

(4) The enterprise has a term of operation for more than 1 year with profit earned in the current year.

(5) Subscribed capitals provided by the parties of investment have been realized according to the prescripts in the contract.

2．Enterprises complying with the following requirements can apply for the confirmation of the status of technologically advanced enterprises:

 (1) Bearing the productive project encouraged by the state for foreign investment

(2) Adopting internationally advanced and proper workmanship and equipments

(3) The quality and technology of products is highly advanced in China.

(4) Enterprises have a term of operation for more than 6 months.

(5) Subscribed capitals provided by the parties of investment have been realized according to thestipulations in the contract.

3 Enterprises boasting the status of both export enterprises and technologically advanced enterprises can select either of the two for the application for confirmation and preferential treatment.

II. Preferential treatment

1. After the expiration of the period of exemption and reduction of income-tax and upon approval by the tax authorities, foreign-funded enterprise with an annual export output value exceeding 70% of its output value of the year shall enjoy a 50% enterprise income-tax reduction treatment. Technologically advanced enterprises shall enjoy another 3 years of 50% enterprise income-tax reduction; upon the expiration of the period of exemption and reduction.

2. Any Foreign Investor who reinvests the profits distributed to him by the enterprise within the territory of China to establish or expand an Export Enterprise or a Technologically Advanced Enterprise and the term of operation is not less than 5 years, with applications and approval by the tax authorities, shall obtain a full refund of the amount of enterprise income tax already paid on the reinvested portion. The foreign investor should pay back full amount of the refund of enterprise income tax in the event that the foreign investor withdraw the investment with the term of operation of less than 5 years.

3. As for the technical reform of the technologically advanced enterprises and export enterprises, equipments imported for own use and its corresponding technologies, accessories and spare parts exceeding the total amount of investment of foreign investment projects shall enjoy exemption from tariff and import-stage value-added tax according to the pertinent stipulations provided that they are products within the scope of authorized operation or cannot be produced interiorly.