CHINA LAW DIGEST NEWSLETTER
Vol. 1, No.6 - July 3, 2002
TOPICS THIS ISSUE:
- Notice on Strengthening Administration of the Sale and Payment of Foreign Exchange in Connection with Technology Import Contracts
- Regulations on the Grant of State-Owned Land Use Rights by Invitation for Tenders, Auction or Listing
- Notice on Preferential Policy on Enterprise Income Tax In Connection With Supplementary Capital Contribution by Foreign Invested Enterprises
- Regulations on Labor Protection in Workplace Using Poisonous Materials
- Notice on Issues Related to Launching the Work of Foreign Exchange Registration for Direct Investment by Foreign Investors
Notice on Strengthening Administration of the Sale and Payment of Foreign Exchange in Connection with Technology Import Contracts
Issue Date: February 20, 2002
Issuing Authority: Ministry of Foreign Trade and Economic Cooperation, State
Administration of Foreign Exchange
Effective Date: March 2, 2002
Summary:
In a follow up to the new regulations on technology import, the Notice was issued to clarify the documents that are to be submitted to a designated foreign exchange bank in order to complete foreign exchange sale and payment procedures for technology importation.
For those restricted technology import contracts, the Technology Import Permit and the Technology Import Contract Datasheet are required to be presented to the designated foreign exchange bank. As for unrestricted technology import contracts, the Technology Import Contract Registration Certificate and the Technology Import Contract Datasheet are required.
The Notice also sets forth the rules governing foreign exchange sale and payment procedures for technology import contracts by a foreign invested enterprise (FIE). If the technology import contract is an appendix to the joint venture contracts or the articles of association of the FIE forms part of the joint venture establishment documents, then the approved Technology Import Contract Datasheet from competent foreign investment authority is required. If the technology import contract is signed after the FIE has been established, such contract shall be subject to approval or registration procedures.
The Notice also specifies eleven types of technology import contracts which include contracts on patent transfer, transfer of patent application right, patent licensing, licensing or transfer of know-how, software licensing, trademark licensing or transfer contract with the contents of licensing of patent or know-how, technology service, technology consulting and other technology co-development contracts.
Regulations on the Grant of State-Owned Land Use Rights by Invitation for Tenders, Auction or Listing
Issue Date: May 9, 2002
Issuing Authority: Ministry of Land and Resources
Effective Date: March 2, 2002
Summary:
The Regulation is an improvement in granting state-owned land use rights in China. It requires that the methods of tender invitation, auction or listing must be used for the grant of land use rights for all types of land uses for business purposes, including for commercial, tourism, entertainment and commodity housing land use purposes. The requirements aim to enhance transparency in granting land use rights.
The granting of state-owned land use rights by listing means the issuing of a listing announcement by the land administration department of a municipal or country level government (Grantor) at the designated land transaction center. The Grantor will grant the land use right based on the results of the bidding.
If the Grantor grants the land use right through agreements instead of the required tenders, auction or listing methods, then disciplinary sanctions will be imposed on the persons in charge.
Notice on Preferential Policy on Enterprise Income Tax In Connection With Supplementary Capital Contribution by Foreign Invested Enterprises
Issue Date: June 1, 2002
Issuing Authority: Ministry of Finance, State Administration of Taxation
Effective Date: January 1, 2002
Summary:
To further encourage multinational companies to invest in China, the Notice specifies the preferential tax treatment for the supplementary capital contribution made by FIEs. For those FIEs in the encouraged investment category, the income generated by the investor out of the supplementary capital other than the original contract may enjoy tax deduction and exemption spelled out in article 8(1), (2) of the Foreign Invested Enterprise and Foreign Company Enterprise Income Tax Law, subject to satisfaction of the following conditions: 1) supplementary capital contribution up to US$60 million or more; 2) supplementary capital contribution up to US$15 million or more and exceed 50% of the original registered capital.
The preferential tax treatment must be approved by a competent tax authority. Although issued on June 1, 2002, the Notice applies to all supplementary capital contribution back to January 1, 2002. This preferential tax policy is, however, not applicable to any tax levied before January 1, 2002.
Regulations on Labor Protection in Workplace Using Poisonous Materials
Issue Date: May 12, 2002
Issuing Authority: Standing Committee of State Council
Effective Date: May 12, 2002
Summary:
The Regulation is issued to improve health of employees working in the workplace using poisonous materials. It aims to reduce the increasing number of diseases caused by poisonous materials in the workplace.
The new regulation not only forces employers to improve working conditions, but also gives workers more legal rights to prevent occupational diseases and enabling workers to receive compensation. Workers have the right to have complete understanding of the dangers of their work and any employers found violating these rights will be punished. Under this regulation, employers are required to improve safety conditions and to provide necessary equipment to ensure the safety of their workers in the workplace. The officers in charge of supervising safety in the workplace may face criminal charges if any worker suffers occupational diseases due to the negligence of the officers.
Employees suffering from poisoning at work have the right to seek compensation from insurance companies and from their employers. Further, the employers cannot terminate the employment contract of the workers before the workers undergo and pass a health examination.
Notice on Issues Related to Launching the Work of Foreign Exchange Registration for Direct Investment by Foreign Investors
Issue Date: April 30, 2002
Issuing Authority: State Administration of Foreign Exchange (SAFE)
Effective Date: April 30, 2002
Summary:
The Notice specifies procedural details for the implementing of the system of foreign exchange registration for foreign investment described in the Notice on Further Strengthening the Work of Verifying the Capital of Foreign Invested Enterprises and Improving the Foreign Exchange Registration System for Foreign Investment, issued on June 4 this year by SAFE.
When the foreign exchange authorities receive confirmation requests from accountants appointed by foreign invested enterprises, they must carry out an examination before registration. An annex to the Notice provides forms of letter of requests, such as requests concerning capital verification for cash remittance capital contributions, requests concerning capital verification for in-kind investment and requests concerning the non-local foreign exchange business of Capital Account.
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The China Law Digest News is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
