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JV rules published
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Winton Dong
AMENDMENTS to the Law on Chinese-Foreign Equity Joint Ventures, which will lift certain restrictions on such enterprises, were officially published on Monday, taking effect the same day.
The amendments consist of 13 chapters, which include 84 articles. Compared with the original rules, 16 revisions have been made.
A comparison of the articles before and after their revision is given as follows:
The original article 43, article 56 and article 87 are totally deleted in the new version.
Before it was revised, article 3 read: export volume of joint ventures should reach at least 50 per cent of the total output value of the year. The new version doesn't mention the minimal export requirement.
In the amended rules, articles 4 and 5 are merged into one and many originally restricted and forbidden sectors are now open to foreign investment.
Before the revision, article 10 and article 15 stipulated that products made by Sino-foreign joint ventures should be sold in Chinese and overseas markets proportionately. But in the new version such a restriction is lifted.
Before it was revised, article 22 stated that no joint venture could reduce registered captial. After revision, registered capital can be reduced after getting approval from concerned bureaus.
After revision, clause 1 of article 27 now stipulates that imported machines supplied by foreign investors as part of the investment should be indispensable for joint ventures.
Clause 1 of article 28 now reads: Foreign investors should be the real owners of industrial patents and know-how they offered as part of the investment.
Before revision, article 53 read: Except for those products which are restricted for export, other products made by Sino-foreign joint ventures are exempt from customs duties and industrial & commercial tax. After revision, the article now reads: Except for those products which are restricted for export, other products made by Sino-foreign joint ventures enjoy tax exemption, tax reduction or tax refunding according to different situations.
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