Article 8.
From the gross profit earned by an equity joint venture, after
payment of the venture's income tax in accordance with the provisions of the tax
laws of the People's Republic of China, deductions shall be made for the reserve
fund, the bonus and welfare fund for staff and workers, and the enterprise
development fund as stipulated in the articles of association of the venture and
the net profit shall be distributed to the parties to the venture in proportion
to their respective contributions to the registered capital.
An equity joint
venture may enjoy preferential treatment in the form of tax reductions and
exemptions in accordance with provisions of state laws and administrative
regulations relating to taxation.When a foreign party uses its share of the net
profit as reinvestment within the territory of China, it may apply for a refund
of part of the income tax already paid.
Article 9.
An equity joint venture shall, on the basis of its business
license, open a foreign exchange account with a bank or another financial
institution which is permitted by the state foreign exchange control authority
to engage in foreign exchange business. Matters concerning the foreign exchange
of an equity joint venture shall be handled in conformity with the foreign
exchange control regulations of the People's Republic of China. An equity joint
venture may, in the course of its business activities, raise funds directly from
foreign banks. The various items of insurance of an equity joint venture shall
be obtained from insurance companies in the territories of China.
Article 10
.For the raw and processed materials, fuel, auxiliary
equipment, etc. needed by an equity joint venture in the approved business scope
thereof, shall be purchased in China or on the international market pursuant to
the principle of fairness. An equity joint venture shall be encouraged to sell
its products outside the territory of China. Export products may be sold on
foreign markets by an equity joint venture directly or by entrusted institutions
related to it, and they may also be sold through China's foreign trade
institutions. The
products of an equity joint venture may also be sold on
the Chinese market. When necessary, an equity joint venture may set up branch
institutions outside China.
Article 11.
The net profit received by a foreign party after fulfilment of
its obligations at law and under the provisions of agreements and contracts, the
funds received by it upon the expiration or termination of an equity joint
venture as well as other funds may be remitted abroad in accordance with foreign
exchange control regulations in the currency stipulated in the joint venture
contract. The foreign party shall be encouraged to deposit in the Bank of China
the foreign exchange which may be remitted abroad.
Article 12.
The wage income and other legitimate income of foreign staff
and workers of an equity joint venture may be remitted abroad in accordance with
foreign exchange control regulations after payment of individual income tax
under the tax laws of the People's Republic of China.
Article 13.
The term of operation of equity joint ventures may be agreed
upon differently according to different lines of business and different
circumstances. The term of operation of equity joint ventures engaged in some
lines of business shall be fixed while the term of operation of equity joint
ventures engaged in other lines of business may or may not be fixed. Where the
parties to an equity joint venture with a fixed term of operation agree to
extend the term of operation, they shall submit an application to the
examination and approval authority not later than six months prior to the
expiration of the operation term. The examination and approval authority shall
decide, within one month of receipt of the application, to approve or
disapprove.
Article 14.
If serious losses are incurred by an equity joint venture, or
one party fails to fulfil its obligations under the contract and the Articles of
association, or an event of force majeure occurs, etc., the contract may be
terminated after consultation and agreement between the parties to the venture,
subject to approval by the examination and approval authority and to
registration with the state department in charge of administration of industry
and commerce. In case of losses caused by breach of contract, economic
responsibility shall be borne by the breaching party.
Article 15
.When a dispute arises between the parties to a venture and the
board of directors is unable to resolve it through consultation, the dispute
shall be settled through conciliation or arbitration conducted by an arbitral
institution of China, or through arbitration by another arbitral institution
agreed upon by the parties to the venture. The partied to an joint venture may
submit the disputes to the People's court, if the parties neither stipulated any
arbitrations clause in the joint venture contract nor reach such written
arbitration clause after the occurrence of disputes.
Article 16.
This law shall come into force on the date of its
promulgation.
