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Technology Stocks : Deswell Industries (DSWL) -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (659)	4/16/1998 3:33:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Paul, Portion of an explanation on Chinese Tax Law TAXATION Under the Income Tax Law of the People's Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises (the "Tax Law"), a Sino-foreign joint venture is subject to a national tax on worldwide income at the rate of 30%. In addition, a local surtax of 3% is levied by the local government, resulting in a combined tax rate of 33%. In order to simplify tax administration, national and local taxes are assessed and collected concurrently. Pursuant to the Tax Law, the national tax rate is reduced to 15% for joint ventures established in the Special Economic Zones of Hainan, Shantou, Shenzhen, Xiamen, and Zhuhai that are engaged in production or business operations, and in the ETDZs set up in China's open coastal cities that are production-oriented. Joint venture companies established in coastal economic zones or in the old urban districts of cities where the Special Economic Zones or the ETDZs are located are subject to the national tax rate of 24%, if they are production oriented, or the rate of 15% if they are within the scope of projects encouraged by the state, such as energy and communications. The Tax Law does not impose withholding taxes on dividends distributed by a joint venture company. The Tax Law and related regulations provide a number of tax holidays and other preferential treatment for production oriented enterprises with foreign investment scheduled to operate for a period of ten years or more. Such enterprises are eligible for a total exemption for taxation for two years commencing from the first profit making year, and a 50% reduction in the subsequent three years. Longer tax reduction periods are available for "export oriented enterprises" (50% reduction in income tax but less than 10% for each year the venture exports 70% by value of production) and "technologically advanced enterprises" (50% reduction in income tax but not less than 10% for an additional three years after the expiration of the normal holiday period). In addition, some local governments offer tax holidays and reductions with respect to local income surtax. The Tax Law also provides that if a foreign party reinvests its share of the profits in the joint venture or in another joint venture project in China with a term of operation of more than five years, it may be eligible, on application, for a refund of 40% of the income tax paid on the invested amount. A full refund may be applied for and granted if an existing investor invests or reinvests it's share of profits in a "technologicallly advanced enterprise" or an "export oriented enterprise" with a term of operation of more than five years. I'll let others interpret all this. Almost reads like US tax law. Ron