URUMQI - Taxation authorities in China's far western Xinjiang unveiled a new rule Saturday exempting enterprise income tax to attract investment to the border cities of Kashgar and Horgos.

The new businesses are exempt from the enterprise income tax for five years, the regional taxation bureau said a statement, citing a notice from the Ministry of Finance and State Administration of Taxation.

The tax-free period lasts from 2010 to 2020, according to the statement.

For those who have paid the tax over the past two years, they can get refunds, it added.

The State Council, China's Cabinet, announced in October a plan to set up economic zones in Kashgar and Horgos. The move is expected to bring prosperity to the relatively poor Xinjiang and shift the country's opening-up strategy from focusing on eastern coastal regions to a more balanced approach.

Kashgar, an ancient Silk Road town that borders Pakistan through the plateau of Pamirs, will become a regional logistics center, a financial and trading hub, and a key processing center for internationally traded goods. Horgos, a China-Kazakhstan border town, will focus on chemicals, farm products, machinery, pharmaceuticals, and renewable energy, according to the plan.

The central government has drawn up ten favorable policies to help establish the two economic zones, ranging from tax exemptions, subsidized electricity and transportation, low-interest loans for infrastructure to development of better rail and air links with neighboring countries.