Qingdao, which hosted the 18th Shanghai Cooperation Organization Summit, has become an essential hub linking China with other SCO member states. Qingdao is looking to position itself as a strategic hub in the network of global trade routes. Over the past three years, the city has signed several port cooperation agreements with other cities, including St. Petersburg, Russia, and Gwadar, Pakistan, helping to enhance its trade links with SCO members.
Foreign trade is an integral part of the economy and is encouraged wherever possible on the principle of the free flow of import and export goods and technology. It has implemented a series of preferential policies for foreign investors. It is advisable to consult with and receive a professional opinion from a qualified tax or investment consultant. Here are some of the preferential policy highlights:
1. Foreign parties of a foreign-invested enterprise will be allowed to directly reinvest their business profits into the registered capital of the enterprise or invest profits in other enterprises.
2. If the foreign invested enterprise engages in breeding, planting, forestry, animal husbandry, or the fisheries, the product sales VAT will be exempted.
3. Approved foreign-funded enterprises will enjoy a tax credit of up to 40% of the investment in purchasing domestic equipment (total invoice price and tax after deduction of refunded VAT and charges of transportation, installation, and testing of the equipment).
4. Income tax on income obtained from a foreign invested enterprise by a foreign businessperson will be exempted. Profits and share interests, bonuses and incomes after enterprise settlement, can be freely remitted abroad.
5.Large and medium-sized enterprises can be contracted by or leased to large international enterprises or consortia. Small and medium-sized state-owned, collectively-owned or township enterprises can be sold, leased or transferred to domestic or foreign enterprises.
6.Foreign banks are encouraged to set up branches in Qingdao. Local income taxes will be exempted for the profits from these branches. Sino-foreign jointly funded or co-op travel agencies are positively encouraged.
7.According to relevant regulations, foreign businesses investing in traffic facilities or public utilities, may operate relevant service businesses and utilize BOT, TOT, or other forms.
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