Issues regarding tax exemptions for imported equipment

Take a look – **this notice might be useful: Notice on Adjusting the Tax Policies for Imported Equipment. To all provinces, autonomous regions, and municipalities directly under the Central Government; to all ministries and commissions of the State Council as well as its directly affiliated agencies: In order to further expand the use of foreign investment, introduce advanced foreign technologies and equipment, promote adjustments in the industrial structure and technological progress, and ensure the sustained, rapid, and healthy development of the national economy, the State Council has decided that, starting from January 1, 1998, customs duties and value-added tax on imported equipment for domestic investment projects that are encouraged for development, as well as for foreign-invested projects, will be exempted within specified limits. The relevant information regarding this matter is as follows: I. Scope of tax exemption for imported equipment (1) For foreign-invested projects that fall under the encouraged categories and Category B of the \"Guidance Catalogue for Foreign Investment Industries\" and involve technology transfer, the equipment imported for domestic use within the total investment amount is exempt from customs duties and value-added tax at the import stage, except for those goods listed in the \"Catalogue of Imported Goods Not Eligible for Tax Exemption in Foreign-Invested Projects\". For equipment imported for personal use under foreign **loan and international financial organization loan projects, as well as equipment supplied by foreign investors under processing trade without being included in the value of the transaction, the same rules apply as mentioned above; that is, except for the goods listed in the Catalogue of Import Goods Subject to No Tax Exemption for Foreign-Invested Projects, no tariffs or value-added tax at the import stage shall be imposed. (II) For domestic investment projects that fall within the \"Catalogue of Industries, Products, and Technologies Currently Encouraged for Development,\" the equipment imported for use within such projects, up to the total investment amount, is exempt from customs duties and value-added tax at the import stage, except for those goods listed in the \"Catalogue of Imported Goods Subject to Taxation for Domestic Investment Projects.\" (III) For projects that meet the above requirements, the technology and supporting components as well as spare parts imported along with the equipment under the contract are also exempt from customs duties and value-added tax at the import stage. (IV) Tax exemptions for imported equipment outside the scope of the above provisions shall be determined by the State Council. II. Management of tax exemptions for imported equipment (1) The authority and procedures for approving feasibility study reports for investment projects shall remain in accordance with **the current relevant regulations. Projects exceeding the specified limit are approved separately by the **Planning Commission** or the **Economic and Trade Commission**. For projects falling below the set limits, approval is granted by provincial **** authorities authorized by the State Council, relevant departments of the State Council, **** authorities in cities with separate planning status, and ** pilot enterprise groups. However, foreign-invested projects must be approved in accordance with the Interim Provisions on Guiding Foreign Investment. When approving feasibility study reports, the approval authorities issue confirmation letters in a standardized format for projects that fall under the encouraged categories or Category B restricted categories of the Catalogue for Guiding Foreign Investment Industries, or for projects included in the Catalogue of Industries, Products, and Technologies Currently Prioritized for Development, or for projects that utilize foreign ** loans or loans from international financial organizations. For projects falling below the limit, the confirmation letter shall be submitted separately with the feasibility study report to the **Planning Commission or **Economic and Trade Commission for record-keeping, depending on the nature of the project investment. Units that approve applications in violation of regulations must be dealt with strictly. (II) The project owner shall, with the confirmation letter issued by the authority that approved the project feasibility study report, and for foreign-invested projects also with the documents approving the establishment of the enterprise issued by the foreign trade and economic department as well as the business license issued by the administrative department for industry and commerce, go to the customs authorities in charge to handle the procedures for import tax exemption. Processing trade enterprises that import equipment provided by foreign parties without valuation can go to the customs authority in charge of them to complete the procedures for duty-free importation, using the approved processing trade contract as proof. The customs conducts an inspection based on these procedures and in comparison with the list of goods exempt from duty. (III) The General Administration of Customs shall assign unified numbers to the items approved for tax exemption, establish a database, strengthen inspections and supervision, and actively cooperate with relevant departments in carrying out verification work. (IV) All relevant units should pay attention to simplifying the operational steps. Streamline approval procedures and accelerate the approval process to ensure that this significant tax exemption policy is put into practice and yields actual results. III. Exemption from customs duties on imported equipment for carry-over projects (1) For imported equipment for technical transformation projects that were approved in accordance with the **relevant procedures before March 31, 1996, starting from January 1, 1998, import customs duties and value-added tax at the import stage shall be exempted, in line with the scope of equipment eligible for tax relief as originally approved. The project owner shall go to the competent customs authority with the original approval documents to handle the exemption procedures. (II) For imported equipment for foreign-invested projects and domestic investment projects that were approved in accordance with the **established procedures from April 1, 1996, to December 31, 1997**, as well as for imported equipment for projects that utilized foreign **loans and loans from international financial organizations from January 1, 1995, to December 31, 1997**, starting from January 1, 1998, import duties and value-added tax on imports shall be exempted, except for those goods for which exemption is explicitly prohibited by these regulations. The project owners shall go to the relevant customs authorities with the originally approved documents to proceed with the exemption procedures.