According to the unified adjustment of the national policy, from January 1, 2008, the internal and external tax rates are unified at 25%. Before then, enterprises still enjoy the following preferential policies.
 
I. tax policy
 
Foreign invested enterprises in Changsha can enjoy the following preferential policies:

1. Enterprises with foreign investment shall pay enterprise income tax at a reduced rate of 30%; Any enterprise with foreign investment of a production nature shall be allowed a 24% in enterprise income tax.

2. Enterprises with foreign investment shall pay local income tax at a tax rate of 3%. Enterprises with foreign investment of a production nature scheduled to operate for a period of not less than ten years shall be exempted from income tax in the first ten years. Enterprises with foreign investment of non-production nature scheduled to operate for a period of not less than ten years shall be exempted from local taxes in the first five years, including local income tax, urban real estate tax, driving license tax on vehicle and boat and butchery tax.

3. The enterprise income tax shall be levied at a reduction rate of 15% after being approved by the State Administration of Taxation, including technology-intensive and knowledge-intensive projects, projects with foreign investment of more than 30 million dollars and a long time to recover the investment, energy, transportation and port construction projects.

4. Any enterprise with foreign investment 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 a fifty percent reduction in the third to fifth years. After the above-mentioned period of tax reduction and exemption, advanced technology enterprises can be extended for three years to pay half of the enterprise income tax. For export enterprises, if the output value of their export products reaches more than 70% of the total output value in the current year, the enterprise income tax can be paid in half according to the current tax rate.

5. Enterprises with foreign investment engaged in agriculture, forestry and animal husbandry and those with foreign investment located in remote areas with underdeveloped economies can, after enjoying official tax reduction and exemption in accordance with the relevant provisions, continue to reduce the enterprise income tax by 15% to 30% according to the amount of tax payable in subsequent years after the official tax exemption and reduction time according to the provisions.

6. Since January 1, 1994, new tax law has taken effect for enterprises with foreign investment. The industrial and commercial consolidated tax is replaced by value-added tax, consumption tax and business tax. For enterprises with foreign investment built before December 31, 1993 and whose tax burden is increased after the implementation of value-added tax, consumption tax and business tax, the increased tax shall be refunded upon the application of the enterprises and the approval of the competent tax authorities within the approved period of operation, but the increased tax shall not exceed five years.

7. Foreign investors of enterprises with foreign investment shall reinvest the profits obtained from the enterprise directly into the enterprise, increase its registered capital, or use the profits as capital to invest in establishing other enterprises with foreign investment, and for those with an operation period of not less than 5 years, 40% of the income tax paid on the reinvestment part will be returned. If the reinvested enterprise is an advanced technology enterprise or an export enterprise, all the enterprise income tax already paid shall be refunded.

8. Income tax shall, upon approval, be levied at a reduced rate of 10% on the royalties obtained for scientific research, development of energy resources, development of transportation industry, production of agriculture, forestry and animal husbandry, development of important technologies and provision of proprietary technologies. Those with advanced technology or preferential conditions shall be exempt from income tax.

9. The export of the products produced by the foreign-invested enterprises (excluding the products restricted by the state for export) shall be exempted from export tax and value-added tax. For enterprises with foreign investment registered after January 1, 1994, the tax policy of "exemption, credit and refund" shall be applied to their export products.

10. The Interim Provisions of the People's Republic of China on Fixed Assets Investment Direction Regulating Tax shall not apply to the fixed asset investment of foreign-invested enterprises in Changsha City, and the regulation tax shall not be levied temporarily.

11. Compatriots from Taiwan, Hong Kong and Macao, as well as overseas Chinese who invest in Changsha can enjoy the same preferential policies in terms of foreign investment according to relevant regulations. 

II. Foreign exchange management

1. Enterprises with foreign investment may open foreign exchange accounts at banks or other financial institutions that are authorized to handle foreign exchange business. Enterprises with foreign investment may also open accounts outside China for business needs with the approval of the municipal administration of foreign exchange. Enterprises with foreign investment may retain the cash from the overhead investment, and pay the full amount into the foreign exchange capital account of the enterprises.

2. Enterprises with foreign investment shall purchase and pay foreign exchange on the strength of the contracts, articles of association and valid import certificates approved by the examination and approval authorities when importing equipment and materials needed for production and operation.In case an enterprise with foreign investment has been approved to set up an overseas branch or office, the funds or working capital needed by it may be remitted abroad after being approved by the municipal administration of foreign exchange.

3. The profits and other legitimate income obtained by foreign investors from foreign-invested enterprises, as well as the funds obtained at the time of termination of the enterprise, may be remitted abroad according to law. Wages and other legitimate incomes of foreign employees of foreign-invested enterprises may be remitted abroad according to law.
 
III. Material Import Policy
 
Starting from January 1, 1998, equipment imported for own use within the total amount of investment of foreign investment projects which involve technology transfer and which are in the encouraged category or Group B under the restricted category of the Industrial Guidance Catalog for Foreign Investment shall enjoy exemption from tariff and import-stage value-added tax, provided that such items are not among commodities listed in the Catalog of Imported Commodities under Foreign Investment Projects not Entitled to Tariff Exemption. 
 
For import equipment approved in accordance with the prescribed procedures of the state prior to March 31, 1996, import duty and import link value-added tax shall be exempted as of January 1, 1998 according to the scope of tax reduction and exemption for equipment previously approved. The project units shall go through the formalities of tax exemption at the competent customs office on the strength of the original approval documents.
 
IV. Land Utilization

1. Enterprises with foreign investment may acquire land use right in accordance with the Interim Regulations of the People's Republic of China on Assignment and Transfer of the Right to the Use of State-owned Land in Urban Areas, the Interim Measures of Changsha City on Assignment and Transfer of the Right to the Use of State-owned Land in Urban Areas, and the Provisions of Changsha City on the Paid-use of State-owned Land in Urban Areas, so as to develop, utilize and manage the land.
2. The land-use right granted according to law may be transferred, leased, mortgaged or used for other activities within the term of use. The legitimate rights and interests of land users shall be protected by law.

3. The maximum time limit for foreign-invested enterprises to acquire land-use rights by means of assignment and transfer according to law is 70 years for residential land; 50 years of industrial land and other comprehensive land for education, scientific research, culture, health and sports; commercial, tourism and entertainment land for 40 years.

4. The land use fee for the use of allocated land by foreign-invested enterprises is 2 to 20 yuan per square meter per year, which shall be handled by the Municipal Bureau of Land Administration and collected on behalf of the Municipal Finance Department. Land-use fees will be exempted for 20 to 30 years for development oriented forestry enterprises, 10 to 15 years for development oriented agriculture and animal husbandry enterprises, 5 to 10 years for investment in airport, port, railway, highway, urban trunk road, bridge, telephone and other energy transportation projects, and 5 to 10 years for investment in advanced technology enterprises, Within five years after the expiration of the term, the income shall be reduced by half according to the national standard.