1. Local Income Tax Preference

(1) Any foreign investment enterprise of a production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from local income tax in the first to sixth years and allowed a 50 percent reduction in the seventh to tenth years; the enterprise scheduled to operate for a period of not less than fifteen years or with its total investment exceeding US$30 millions shall, from the year beginning to make profit, be exempted from local income tax in the first to eighth years and allowed a 50 percent reduction in the ninth to fifteenth years. Any foreign investment enterprise of a production nature scheduled to operate for a period of less than ten years or of a non-production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from local income tax in the first and second years and allowed a 50 percent reduction in the third to fifth years.

(2) In the regions inhabited by the minority nationalities or in the remote underdeveloped areas defined by the State Council or the provincial people's government, any foreign investment enterprise of a production nature engaged in the prospecting and exploitation of mineral resources and scheduled to operate for a period of not less than ten years may, upon approval by the tax authorities of an application filed by the enterprise, continue to be allowed a 50 percent reduction of the amount of local income tax payable following the expiration of period for tax exemption and reduction; the enterprise scheduled to operate for a period of less than ten years may, upon approval by the tax authorities of an application filed by the enterprise, continue to be allowed a 50 percent reduction of the amount of local income tax payable in the sixth to eighth years following the expiration of the period for tax exemption and reduction.

(3) Any foreign investment enterprise of a production nature may, when its annual export value exceeds 50 percent of the output value, be exempted from local income tax that year, after the specified reduction and exemption expires.

(4) Any foreign investment enterprise engaged in the exploration and comprehensive utilization of natural resources, in power station, airport, highway, bridge, harbor, wharf, waterworks (not including the pipe network), water conservancy and other infrastructure facilities, shall be exempted from local income tax.

(5) Any foreign investment enterprise engaged in the housing projects for the medium and low income urban residents shall, upon approval by Chongqing People's Government, be exempted from local income tax.

2. Enterprise income tax preferences

(1) The income tax on foreign investment enterprises of a production nature shall be levied at the reduced rate of 24 percent.

(2) The income tax on foreign investment enterprises established in Economic and Technological Development Zones or the high and new-tech enterprises in the High and New tech Development Zones defined by the State Council shall be levied at the reduced rate of 15 percent.

(3) The income tax on foreign investment enterprise in technology-intensive, knowledge-intensive projects, in projects with investment over USD$ 30 million, and with long time period for recovery of investment, in energy, transportation and harbor constructions shall, upon approval by the tax authorities, be levied at the reduced rate of 15 percent.

(4) Any foreign investment enterprise of a production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from income tax in the first and second years and allowed 50 percent reduction of the amount of income tax payable in the third to fifth years.

(5) Any advanced technology enterprise set up by foreign investment enterprise may be levied at the reduced rate of 50 percent of income tax for a period of another three years following the expiration of the period for tax exemption and reduction.

(6) Any foreign investment enterprise producing products for export shall, when the annual export value exceeds 70 percent of its output value, upon approval by the tax authorities, be levied at the reduced rate of 10 percent of income tax for that year after the expiration of the period for tax exemption and reduction.

(7) Any foreign investment enterprise engaged in agricultural development, deep processing of agricultural by products, agricultural products for export shall, upon approval by the tax authorities of an application filed by the enterprise, be allowed a 15 to 30 percent reduction of the amount of income tax payable for a period of another five years following the expiration of the period of tax exemption and reduction.

(8) Any foreign investment enterprise established in the regions inhabited by the minority nationalities and in the remote underdeveloped areas defined by the State Council and the provincial people's government, and engaged in agricultural development, in deep processing of agricultural by-products with new technology in forestry development shall, upon approval by the tax authorities of an application filed by the enterprise, be allowed a 15 to 30 percent reduction of the amount of income tax payable for a period of another ten yeas following the expiration of the period for tax exemption and reduction.

(9) Any foreign investor of an enterprise with foreign investment which reinvests its share of profit obtained from the enterprise directly into the enterprise by increasing its registered capital, or uses the profit as capital investment to operate for a period of not less than five years shall, upon approval by the tax authorities, be refunded 40 percent of the income tax already paid on the reinvested amount. The investor which reinvests the profit as capital investment in the enterprise producing export products or in technologically advanced enterprise scheduled to operate for a period of not less than five years shall be refunded all the income tax already paid on the reinvested amount.

(10) Any foreign investor which has no establishment or place in China but derives profit, interest, rental, royalty and other incomes from sources in Chongqing shall, besides the exemption on income tax according to the law, be levied at the reduced rate of 10 percent of income tax on such income.

Where the funds, equipment is provided on favorable conditions, or technology supplied is advanced, more preferences on income tax reduction or exemption shall be decided by Chongqing People's Government.

(11) The income tax on the profit from the tollgate of the highway invested by foreign investor shall be levied by the Tax Bureau of Chongqing and be collected in Treasury of Chongqing Municipality, the share of which that belongs to Treasury of Chongqing municipality shall be wholly refunded to the investor before the foreign investment is recovered.

3. Preference of refund of tax on export products and extra tax paid

(1) The tax exemption, refunding and compensation to the export products by the foreign investment enterprises shall be dealt with promptly by the tax authorities according to the Regulations of the State Council on Tax Refunding for Export Products by Enterprises with Foreign Investment.

(2) The extra tax paid by the foreign investment enterprises established before December 31, 1997, shall, due to the appearance of tax on value added, tax on consumption and tax on business, upon approval by the tax authorities of an application filed by the enterprise, be refunded for a period of not more than five years within the approved term of operation.

4. Other taxes preferences

(1) The business tax from tollgate on the highway with foreign investment shall be levied by the local tax authorities and collected by the Treasury of Chongqing Municipality, and shall be refunded or reinvested on the construction of other highways before the investment of the foreign investor is recovered.

(2) Foreign investment enterprise of a production nature and foreign investment enterprise of a non production nature scheduled to operate for a period of not less than fifteen years shall be exempted from land on housing tax (newly constructed buildings) and license tax on vehicle and boats for ten years and three years respectively.

(3) Foreign investment enterprise shall, upon the verification by the tax authorities, be exempted from tax on housing and land and license tax on vehicle and boats within the operation period when engaged in the comprehensive agricultural exploration, the deep processing of agricultural by products with new technology, the comprehensive exploration and utilization of natural resources, energy and energy-saving construction, transportation infrastructure, technical renovation in state-owned medium and large enterprises, advanced technology, products of export, urban infrastructure, protection of environment and ecological equilibrium, development of tourism, middle and higher technical education.

(4) Foreign investment enterprise engaged in scientific agricultural exploration in waste hills and waste land shall, from the year beginning to make income, be exempted from tax on agriculture in the first to fifth years.

(5) Foreign investment enterprise engaged in agricultural specialty products in waste mountain, waste hill, wasteland (uncultivated land) shall, from the year beginning to make income, be exempted from tax on agricultural special products in the first to third years.

(6) Foreign investment enterprise engaged in the improvement of grassland, pasture, grassed and breed of domestic animals shall be levied 3 percent of tax on animal husbandry.

(7) Foreign investment enterprise of a production nature established in the regions inhabited by the minority nationalities and in remote underdeveloped areas defined by the State Council and provincial people's government shall be exempted from tax on housing and land, and license tax on vehicle and boats.

II - Business Registration

5. Financial institutions overseas shall be encouraged to set up branch establishments in Chongqing, international consortiums, international corporations shall be encouraged to set up joint ventures, cooperation venture, wholly foreign owned enterprises, and branch establishments in Chongqing.

6. Foreign investment enterprise shall be encouraged in the form of joint venture and cooperation venture in the projects of power station, airport, highway, bridge, harbor, wharf, of waterworks (not including the pipe network) water conservancy and other infrastructure facilities. Specific facilities from aforesaid projects can be run by foreign investor independently, upon the approval of the government. Foreign investment enterprise can invest in other enterprises or service business related to the aforesaid projects according to the regulations of the State.

7. Foreign investment enterprise shall be encouraged to become a shareholder, to purchase, merge or contract, lease the domestic enterprises of Chongqing.

8. Units with legal personality of colleges, universities and research institutes, private enterprises shall be encouraged to set up joint venture and cooperation venture with foreign businessmen. Overseas Chinese students shall be encouraged to set up enterprises with investment in the name of the company or works, the enterprises set up in this way shall be regarded as foreign investment enterprises.

9. Promotions for the development of foreign investment enterprises and for rational flow of assets:

(1) Foreign investment enterprise with good supply of funds or with good markets for their products shall be encouraged to set up constituent companies. Foreign investment enterprises shall be encouraged to cooperate with domestic enterprises to open new foreign investment enterprises or domestic enterprises.

(2) The transfer between foreign capital and domestic capital shall be encouraged for the rearrangement of foreign capital and domestic capital. The transfer shall be regarded as change of registration, and no registration fee shall be charged.

(3) Foreign investment enterprise shall be encouraged to set up market for means of production, market for essential factors of production and other new types of market with the purpose of revive assets, particularly the housing and land resources.

10. Foreign investment enterprise engaged in major projects or with registered capital of over US $2 millions can adopt a name with the category of its trade. When overseas investor purchases or merges domestic enterprises, it can either apply for a new name or keep the original name for the new enterprise.

III - Foreign currency control & credit

11. Any foreign investment enterprise can open foreign currency accounts in any banks or financial institutions in Chongqing Area which have the right in foreign currency business. If there are special needs, one can open foreign currency accounts at banks (including foreign banks) in any other cities which have the right in foreign currency business. Any foreign investment enterprise can open one or two balance accounts according to one's needs, if there are special needs, more than two balance accounts can be opened.

12. There is no borrowing limit for foreign investment enterprises to get loans from financial institutions, enterprises and individuals abroad, or from foreign financial institutions in China. The foreign currency borrowed can be changed into Renminbi for the purchase of raw materials and equipment in China. Foreign currency can be bought by Renminbi for the payment of loans.

13. The profit in foreign currency derived legally from one s investment can be freely remitted abroad. With agreement form the board of directors and duty paid proof, one's profit in Reminbi can be changed into foreign currency in the bank appointed by the foreign exchange control administration, the foreign currency can be remitted abroad or used as capital investment in China.

14. With an investment agreement a foreign investment enterprise can open a three-month temporary foreign currency account for its investment credit, the account can be extended if there are special needs.

15. Foreign currency in cash from exports can be deposited into foreign currency liquidating account or used for the payment of loans, or be converted in Renminbi in foreign exchange bank and foreign exchange center.

16. Foreign investment enterprises shall have the same credit support the Chinese export enterprise has from the banks in Chongqing Area when there is shortage of working fund for the production of goods for export.

IV - Land and housing

17. Any foreign investment enterprise which obtains the right to the use of land from the grant of administrative authorities, and the land is for business use, pays at the reduced rate of 50 percent of site use fee (including development fee and land use fee) according to the standard decided by Chongqing People's Government; independent developer pays at the reduced rate of 50 percent of land use fee according to the standard decided by Chongqing People's government; commissioned developer pays development fee once and for all and pays at the reduced rate of 50 percent of land use fee according to the standard decided by Chongqing People's Government.

Any foreign investment enterprise which obtains the right to the use of land from the grant of administrative authorities shall be exempted from the land use fee when the land is used for agriculture, animal husbandry, forestry, and fishing production, for scientific, educational and public health purposes, for the construction of power station, airport, highway, bridge, harbor, wharf and waterworks (not including the pipe network), water conservancy facilities and other infrastructure facilities.

18. Any foreign enterprise producing goods for export or technologically advanced enterprise or projects funded by foreign investment enterprise shall be exempted from site use fee or land use fee for a period of three years following the operation day, pay at the reduced rate of 50 percent of the standard decided by Chongqing People's Municipal Government from the fourth year. The enterprise scheduled to operate for a period of more than ten years shall be exempted from land use fee for five years.

Any foreign enterprise uses land temporarily for the prospecting of mineral resources shall be exempted from the land use fee for a period of not more than six months, and pays at the rate of 50 percent of land use fee according to the standard decided by Chongqing People's Municipal Government when the period is more than six months.

19. Any foreign enterprise established in the regions inhabited by the minority nationalities or in remote underdeveloped areas defined by the State Council or the provincial people's government shall be exempted from land use fee.

20. Any foreign investment enterprise which purchases the right to the use of land for the construction of power station, airport, highway, bridge, harbor, wharf, waterworks (not including the pipe network), water conservancy, and other infrastructure facilities shall, upon approval of the authorized government, be allowed the lowest land price, the purchase payment can be entered as suspense debit and be paid by installments within ten years after the project is in operation.

21. The site use fee or land use fee payable by foreign investment enterprise begins to calculate from the operation day, one pays six-month land use fee for period of more than six months but less than twelve months, shall be free from land use fee for a period of less than six months.

The standard of site use fee or land use fee payable by foreign investment enterprise may, under circumstances, be subject to adjustment every five years. Those enterprises which pay up all the fee for fifteen years, the standard remains unadjusted.

22. Any foreign investment enterprise of a production nature established in the form of joint venture, cooperation venture, technology investment, and other forms shall, on the condition that the legal personality of Chinese party as the controlling one in the business be not changed, be exempted from the payment for the right of using the land.

The Chinese party uses the land from the grant of administrative authorities as contributions in the joint venture or cooperation venture, and the legal personality of Chinese party as the controlling one is changed, the foreign investment enterprise can, upon application, obtain the right of using the land at the rate of 20 percent of the price. If the Chinese party still has difficulty in meeting the specified investment proportion, the enterprise can apply for even lower price for the right of using the land or apply for a five-year delay payment.

23. Any foreign investment enterprise in high-technology enterprise, urban infrastructure facilities, public welfare, power station, airport, highway, bridge, wharf, waterworks (not including pipe network), water conservancy facilities, the housing projects for the medium and low income urban citizens and the housing projects for teachers, shall upon approval by Chongqing People's Municipal Government, be exempted from the additional charge for road construction and vegetable plots funds when rural land of collective ownership is needed.

Any foreign investment enterprise engaged in the construction of highway, harbor and wharf shall, along the highway and in the harbor district, have priority in housing and land development projects, in service facilities, in road and water transportation. The foreign enterprise can obtain land for its development and use at favoured price in the neighboring towns.

24. When the ownership or management right of Chinese party is leased to body corporate abroad and the legal personality of the Chinese party is canceled, the right of using the land shall be claimed back by the county government, and then be transferred or leased out to the lease enterprise for its use, the lessee shall pay the price for the right of using the land or land use fee according to the regulations of the government.

When the whole Chinese enterprise but the legal personality of Chinese party is leased out or only the management right is leased out, the right of using the land can either be dealt with according to the aforesaid provision or, upon the approval of the land management department of Chongqing People's Municipal Government, be leased out to the lessee by the Chinese enterprise, the lessor (or the party stipulated by the lease contract) pays the land use fee.

25. Any foreign investment enterprise engaged in the housing projects for the medium-and-low income urban residents shall be allowed the preference stipulated in the regulations on the management on the Housing Projects for the Medium and Low Income Urban Residents by Chongqing People's Government, the land shall be granted by the administrative authorities, and the project shall be exempted from or be network of trading establishments, the fee to the construction of civil air defense, the fee to the post and telecommunication facilities, the fee to fire-fighting facilities, the funds for the renovation of hazardous school buildings, the funds for water and electricity. The apartments houses for the medium and low income urban residents is to be sold at parity price or at low profit first and then to be rented.

26. Only registration fee is charged when foreign investment enterprise registers for the right to the use of land. And only the cost is charged for the land appraisal to foreign investment enterprise engaged in high tech enterprise, products exporting enterprise, basic industry, public utilities, the housing projects for the medium and low income urban residents, the housing projects for teachers, the transformation of the enterprises in difficulty or the old enterprises.

27. Any foreign investment enterprise which needs land owned by the rural collectives for its projects, the land management department shall represent the government of the same level to make plans on the supply of land, and sign a contract with the foreign investment enterprise.

28. Any foreign investment enterprise engaged in public welfare, the scientific and educational programs supported by the state, the construction of power station, airport, highway, bridge, wharf, waterworks (not including the pipe network), the housing projects for the medium and low income urban residents and the housing projects for teachers, and other uncommercial enterprises, the land for the projects shall be granted by the county and above governments. Foreign enterprise engaged in production, services, real estate, tourism and other profitable enterprises, the land for the projects shall be acquired by means of purchase, transfer and lease.

The right to the use of land acquired by the means of lease by foreign investment enterprise can, upon approval and within the term of the lease contract, be subleased and inherited, but cannot be mortgaged.

29. The land use fee or site use fee shall be collected by the land management department of district, city or county.

30. When the right to the use of land is acquired by foreign investment enterprises through the grant of the administrative authorities, or the ownership of real estate is transferred to foreign investment enterprises, the actions should be ratified by the authorized government according to the regulations of State Council. When the authorized government decides not to ratify such actions, the transferor should hand in the land earnings from the transfer to the Treasury according to the regulations of State Council.

31. Any foreign investment enterprise established in regions inhabited by minority nationalities and in the remote underdeveloped areas defined by the State Council and the provincial people's government, be allowed the more favorable policy separately negotiated.

32. When the land owned by the rural collectives is needed for foreign investment enterprises, the land shall be first purchased by Chongqing People's Government, county(city) government, and then be leased to the foreign investment enterprises according to the law. When the rural collective economic entity uses the original site as contributions or as the condition for cooperation, or use other land in the joint venture with foreign investment enterprises in agriculture, forestry, animal husbandry, fishing development, the site or land shall, upon approval by the land management department of Chongqing People's Government, and the concerned agreement shall be presented to the Chongqing People's Government for record. The land ownership cannot be changed and the land cannot be transferred within the term of the contract.

When the land owned by the rural collectives is needed for foreign joint stock company, it can either be dealt with according to the aforesaid provision or according to the regulations of the State on the land management for joint stock company.

33. When appraisal in real estate of foreign investment enterprise is entrusted, only half appraisal fee of the standard shall be charged.

V - Operation of business

34. Foreign investment enterprises shall be able to decide by themselves the ratio of their products for overseas market to for domestic market without restrictions, except for those products for which the State has special regulations.

35. When the foreign investment enterprise investing in the construction and operation of highway, the standard of tollgate it charges can be adjusted according to price inflation index, upon the approval of Bureau of Finance, Bureau of Price Administration, Bureau of Transportation.

36. In the Chinese-foreign cooperation enterprise engaged in the construction and operation of airport, highway, bridge, harbor, wharf, waterworks (not including the pipe network) and water conservancy projects, the foreign partner shall have priority in the allotment of earnings from the above projects during the cooperation period.

VI - Material import & export

37. Any foreign investment enterprise producing products for export can, upon approval by the customs of an application filled by the enterprise, set up bonded warehouses or bonded factories according to its needs.

38. When a foreign investment enterprise needs to import goods for the manufacture of products for domestic market or to export its own products, it should apply to Committee of Foreign Trade and Economy of Chongqing for licenses according to the regulations on the management of import license on commodities of the State, if necessary, those goods for which no import or export licenses are needed should be released in order by the customs after examination of the concerned certificates.

39. Any foreign investment enterprises established between October 1, 1995 and March 31, 1996, and its total investment is below US$30 million, the deadline for the arrival of imported goods will be put off for six months to June 30, 1997, or its total investment is over US $30 million (including US $30 million), the date of arrival of imported goods is before June 30, 1998, the goods imported shall have the going tax preferences.

If the singed import contract of above foreign investment enterprises cannot be completed during the period of grace, the period can be extended again according to the regulations of the State.

Tax exemption and reduction on special vehicle and boats within the scope of business of foreign investment enterprises shall be approved by the Customs Head Office.

40. If the foreign investment is brought into the line with the technical innovation projects which were included in the technical innovation plans of the State and of Chongqing before April 1, 1996, and the projects with investment of over 50 million Renminbi in energy, transportation and metallurgy projects, and the projects with investment over 30 million Renminbi in light industry, textiles, electronics, the equipment imported before December 31, 1997 shall be allowed a 50 percent reduction on taxes. As to the above projects with investment below 50 million Renminbi and below 30 million Renminbi respectively, the equipment imported before December 31, 1996 can still be allowed a fifty percent reduction on taxes. If the import contract cannot be completed before the date, the foreign investment enterprise can apply for the extension of the period of grace through Committee of Trade and Economy and Treasury, the extension is to be approved by the State Council.

41. Import equipment and articles for science and education purposes by colleges, universities and research institutes continue to enjoy tax immunity.

42. Import articles specially designed for the handicapped continue to enjoy the tax preference. The tax preference on articles donated gratuitously by foreign governments and international organizations shall still be valid. The tax immunity is to be approved by the customs.

43. The regulations ratified by the State Council in the correlation of ratio of parts made in China to import parts and the variable levy system on cars, other vehicle (light truck) and video cameras remain valid during the Ninth Five-Year Plan.

44. In the Ninth Five-Year Plan the airplanes imported by the civil aviation departments shall continue to have a reduced rate of duty on value added, the materials and goods imported by the Aircraft Industry Corporation for the production of mainline airplanes shall, within the import quota approved by the State Council, be exempted from customs duty and duty on value added.

45. The special equipment imported with the approval of Ministry of Transportation and other competent industrial departments for communication, harbor, railway, highway and airport continue to have a 50 percent reduction on taxes.

46. The domestic enterprises engaged in the developmental settlement of population in the Three Gorges Reservoir District shall have quota fixation management for the goods imported for their projects, the import duty and duty on value added shall be totally refunded.

The customs shall give priority and simplified procedures in passing the imported goods for major agricultural projects, major projects, key products, high-tech products, high-tech enterprises and for the enterprises with credit worthiness classified by the customs.

47. When the inspection and testing of imported equipment of foreign investment enterprises is conducted jointly by the Commodity Inspection and Testing Office and the technical personnel of the concerned enterprises, and the foreign investment enterprises engaged in the exploration of natural resources, power station, airport, highway, bridge, harbor, wharf, high-tech enterprise, or its export value exceeding 50 percent of total annual production value, the fee to commodity inspection and testing shall be charged at reduced rate of 50 percent of the standard of the State, on this basis, a 20 percent reduction of the fee shall be allowed to the part above 5000 RMB Yuan, if the charge for one inspection and testing is over 5000 RMB Yuan.

48. Toward those foreign investment enterprises which are qualified for the certificate of origin for general system of preferences, the Commodity Inspection and Testing Office should help them understand and make use of the preferential treatment from the general system of preferences, and offer to provide certificate for general system of preferences for every shipment exporting to the country offering the reference.

49. The imported machinery, equipment or spare parts for the foreign investment enterprises shall, for which the foreign investor sets the price and provides the capital, or the foreign investor is entrusted for the purchase, be subject to the appraisal of the Commodity Inspection and Testing Office and a quick, efficient and fair appraisal shall be made.

50. In order to enhance the competitiveness of the products of the foreign investment enterprises in both the international and domestic markets, the Commodity Inspection and Testing Office shall make use of its advantages in technology and personnel to help the enterprises in quality control so as to enhance the quality of product according to the international standards, to spread and implement ISO9000 systems.

VII - Personel and labour management

51. Cadres with status of ownership by the whole people should be allowed to move to foreign investment enterprises, with the exception of those who are under the special restriction of the State. Their moves should be regarded as moves to the work units of ownership by the whole people, and the working units, the personnel departments of governments, personnel exchange agencies should deal with necessary formalities for them. Those managerial and technical personnel working in foreign investment enterprises, their moves should abide by the labor contract signed by the two parties, one cannot sign a new labor contract before the old contract terminates.

52. The returned personnel from abroad and the graduating students from colleges and technical secondary schools retain their own status stipulated in the regulations of the State, and their status shall be acknowledged in the future transfers. The personal files of the professional and managerial personnel, the graduating postgraduates, graduates from colleges and technical secondary schools shall be managed by personnel exchange agencies under the personnel department of local governments.

53. When the professional and technical personnel working in foreign investment enterprises need to apply for the professional or technical qualifications, or participate in the examinations conducted by the State for the qualifications or for practice licenses, the personnel exchange agencies under the concerned personnel department of government shall deal with the matter according to the regulations formulated by the Working Group on the Reform on Academic and Technical Titles.

54. Foreign investment enterprises can, according to their needs, employ personnel belonging to work units of different ownership, who may be transferred (shifted) or temporarily transferred to the enterprises.

VIII - Exploration of mineral resources

55. Foreign investment enterprises engaged in the exploration of mineral resources shall have the following preferences besides the preferences in the concerned regulations of the State:

(1) The fee to the prospecting in the specified district can be paid by installments before tax in the first and fifth years beginning from the commercial exploitation of the ore deposits, and can be paid by installments before tax in two years where the term of the license for mineral exploitation is less than 10 years.

(2) The regulations of the State on the acceleration of depreciation for fixed assets shall be applicable during the phase of commercial exploitation.

(3) Reduced rate for mineral resources compensation shall be taken into consideration where the exploitation are done in the regions inhabited by the minority nationalities and in remote underdeveloped areas defined by the State Council and the provincial people's government.

(4) Reduced rate or exemption from mineral resources compensation shall be taken into consideration where internationally advanced technology is used in the exploitation of low-grade ores or ores difficult for dressing and smelting.

(5) Foreign investment enterprises which operate at a loss due to force mature can be allowed a maximum of 50 percent reduction of the mineral resources compensation or delayed payment for the deficit year.

(6) For the comprehensive exploitation of associated minerals in the specified district, the mineral resources compensation shall be levied at the reduced rate of less than 50 percent, where the kinds of ores are under the restrictions of the state, reports shall be presented to the Administration on Geology and Mineral Resources of Chongqing for record; those kinds of ores of which the purchase is monopolized by the State shall be purchased by the departments appointed by the State.

(7) When the mineral products mined are to be smelted and processed in Chongqing, the concerned departments shall provide help and convenience for its smelting, processing and transportation.

IX - Local fees

56. A special ID card for foreign staff and workers in the foreign investment enterprises can be obtained upon application, with the card, the foreign staff and workers shall enjoy national treatment when having accommodation in the hotels for foreigners and tourists or receiving medical care in hospitals of Chongqing, the charges can be settled in RMB.

57. Water, electricity and gas supply for foreign investment enterprises should be included in the supply program of the local departments, and foreign investment enterprises and domestic enterprises shall be treated equally and be charged with the same standards of price.

58. The standard of the road user charges for the cars for their own use or the cars brought in from abroad by the foreign investment enterprises shall be the same as that for domestic enterprises, the original standard of double charges shall be canceled.

59. Foreign investment enterprises have the right to refuse any administrative, institutional fees which are not stipulated in the regulations of the State Council, the Ministries and Commissions of the State, or not approved by Chongqing People's Municipal Government.

X - Other matters

60. Foreign investment enterprises which invest in transforming bankrupt enterprises, enterprises in difficulty, and take responsibility for the take-over and arrangement of the staff and workers of the original enterprises shall be exempted from the land use fee, and shall be allowed other preferential policy.

61. When state-owned enterprises use part of their assets as contributions in Chinese-foreign joint ventures and cooperation ventures, in the appraisal of the assets as contributions, medium-size enterprises shall have a right of modification within the extent of 10 percent, small enterprises, 20 percent.

62. Companies, enterprises, economic organizations or individuals from the regions of Hong Kong, Macao and Taiwan engaged in joint ventures, cooperation ventures or wholly foreign-funded enterprises shall be treated with reference to these measures.

63. These preferential measures shall be in force in January 1, 1997. The preferential measures and tax preferences for the foreign investment enterprises established before January 1, 1997 remain unchanged.