2. Enterprises may enjoy a reduced income tax rate of 15% if:

a. the project is technology-intensive or knowledge-intensive;

b. projects involve energy, transportation or port construction;

c. the total investment is more than US$30 million with a long return period;

3. Export-oriented enterprise with annual export value greater than 70% of its yearly production output in any year is eligible for a flat income tax rate of 12% for that year.

4. Enterprises with long-term (1 0-year or more) operation periods may be tax-free for the first two profitable years and the corporate income tax may be reduced in half for the next three years. High-tech enterprises may enjoy this reduced income tax rate for three more years.

In order to develop high-tech and other advanced technology related industries, the State Science and Technology Commission has approved 52 NDZs in the following areas:

Anshan, Baoding, Baoji, Baotou, Beijing, Changchun, Changsha, Changzhou, Chengdu, Chongqing, Dalian, Daqing, Foshan, Fuzhou, Guangzhou, Guilin, Guiyang, Hainan, Hangzhou, Harbin, Hefei, Huizhou, Jilin, Jinan, Kunming, Lanzhou, Luoyang, Mianyang, Nanchang, Nanjing, Nanning, Qingdao, Shanghai, Shenzhen,Shenyang, Shijiazhuang, Suzhou, Taiyuan, Tianjin, Weifang,Weihai, Wuhan, Wulumuqi, Wuxi, Wuzhou, Xiamen, Xiangfan, Xi'an, Zhengzhou, Zhongshan, Zhuhai, Zibo.

Foreign invested enteprises located in the NDZs are entitled to the following preferential treatments:

1 . In general, enterprises are eligible for a reduced corporate income tax rate of 15%.

2. Export-oriented enterprise with annual export value greater than 70% of its yearly production output in any year may be eligible for a flat income tax rate of 1 0% for that year.

3. New enterprises are entitled to be tax-free for the first two years in operation. Enterprises with long-term (1 0-year or more) operation periods may be tax-free for the first two profitable years.

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