China Yantai Export Processing Zone

Background
Yantai Export Processing Zone, approved by the State Council on April 27, 2000, is one of the first 15 export processing zones in China and is the only one that combines the harbor with the zone. It carries out the system of within the boundary but out of the Customs operated in accordance with the international practices. All these have set up flexible and convenient business environment for the export processing enterprises.

Part 1 Location of YTEPZ
Situated in the north of Yantai City, Yantai Export Processing Zone is adjacent to Yantai Railway Station to the south, linked with Yantai Tongsan Expressway to the north, connected to Yantai Harbor to the east and urban residential area to the west, facing Japan and Korea across the sea. The zone has a total area of 3 K㎡, in which the initial one is 1.1km2 . The zone has a favorable location, convenient transportation, vast hinterland and great development potential.

Part 2 Present situation of development and planning
The zone has been focusing on the construction of the investment environment since its foundation. After preparation in the first phase, the zone has finished the construction of all infrastructure facilities. So far, over 200,000 m2 of workshop, including 50,000 m2 of electronics building, 40,000 m2 of bonded warehouse, 4 new transformer rooms that can add another 2730KVA electricity load, 20,000 m2 of main road, and 5,000m of sewage piping have all been completed according to the international high standard. 
At present, the Administrative Committee of Yantai Export Processing zone is allowed to approve the economic project and processing trade business up to US$30 million. The service mechanisms of The Customs, Commodity Inspection Bureau, Tax Bureau, Industrial and Commercial Bureau and the related enterprises of Bank, Insurance and Transportation have all been set up and put into operation. Now the perfect infrastructure facilities, efficient Supervision, convenient Customs procedures and high-quality management have made the zone attractive enough to bring many investors to be here. At present there are enterprises invested by businessmen from Korea, Japan, USA, Sweden, Israel, Taiwan and Hong Kong, etc. which cover the fields of electronics, automobile parts and components, fine chemical, instruments and meters, noble metal processing, sports articles and stationery, network software and food processing, etc with the total contractual foreign capital of over USD80 million.

Part 3 The difference between export processing zones and tax-bonded areas
The tax-bonded area is mainly engaged in processing, trade, storage and exhibition. While the export processing zone focus to support export processing enterprises, standardize the processing trade management, encourage establishing the enterprises who make fully use of domestic and overseas resources, develop the lines of high-technology, high added value and no-pollution as well as the storage and transportation enterprises matched for the production enterprises.
Part 4 Preferential policies
The investors can enjoy many preferential policies in Yantai export processing zone. It can be described as the following.
Customs Policies
1) The zone carries out the management of 24-hour enclosed Customs supervision. All the Customs procedures of file keeping, declaration, examination and releasing are handled in the zone.
2) For the enterprises in the zone, the usual customs registration brochure are cancelled, the commodities flowing in and out of the zone are only 
required to put on records, and no bank guarantee deposit account is required.
3) Raw materials, spare parts and components, packing materials and consumption goods imported for the enterprises own use are treated as bonded goods.
4) Machines and equipments, construction materials and reasonable quantity of office appliance imported by the enterprises in the zone are exempted from tariffs and import-related value-added tax.
5) Domestic Machines and equipments, raw materials, spare parts and components entering the zone are treated as exports and can enjoy tax-refund for export.
6) The commodities flowing between the zone and abroad, except those who need passive quota, are not required to have import license and quota.
7) The enterprise in the zone is allowed to transfer its semi-finished products and modules to companies outside the zone for further processing and entrusted processing.
Foreign exchange control and other policies 
1) The enterprises of the zone are allowed to open foreign exchange account freely, in which the enterprises can reserve the foreign exchange at a quota of 100% and withdraw the money freely.
2) The enterprises in the zone are not required to go through the canceling after verification procedures while receiving and paying foreign currency.
Tax reduction, exemption and bonded policies 
1) For foreign-funded enterprises, whose business term is over 10 years, the income tax is reduced to 15%. It will be exempted for the first 2 years and levied at half rate during the 3rd to 5th year from the year of showing profits. 
2) For the export-oriented enterprises whose export volume account for 70% of the year’s total output, the income tax will be reduced to 10% after the reduction and exemption period.
3) For the approved advanced technology enterprises the income tax will continuously be levied at half rate if they are still the advanced technology enterprises after the reduction and exemption period.
4) The export processing products and taxable labor service of the zone are exempted from value-added tax and consumption tax.
5) The value-added tax of the water, electricity and gas used for production by the processing enterprises in the zone can be returned at the rate of 13%.
6) If the foreign investor, who has already set up the enterprise in the zone, puts the profits gained in China to the original company as the added registration capital and or to a new foreign-invested company of no less than 5-year business term, 40% of the enterprise income tax based on the re-investment value will be returned upon the approval of tax authorities. If the profit is used to enlarge the export-oriented or advanced technology enterprises, the enterprise income tax of the re-investment value will be totally returned.
7) The newly opened construction projects are exempted from urban development utilities and facilities fee. 
8) Anyone and organizations who bring the projects to the zone can get the rewards according to the investment promotion policies set by the Municipal Government of Yantai and the Administrative Committee of Yantai Export Processing Zone.