G/SCM/Q2/CHN/65  
 
28 April 2016  
(16-2385)  Page: 1/2  
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES 
REPLIES TO QUESTIONS FROM THE SE PARATE CUSTOMS TERRITORY OF  
TAIWAN, PENGHU, KINMEN AND MATSU1 REGARDING 
THE NEW AND FULL NOTIFICATION OF CHINA2 
The following communication, dated 26 April 2016, is being circulated at the request of the 
Delegation of China. 
 
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Preferential Tax Policies for Enterprises wi th Foreign Investment Established in the 
Pudong Areas of Shanghai (p. 14)  
Question 1 
 We know that such preferential tax policies , (e.g. "5 years of exemption and 5 years of 
reduction by half"), started on 1 January 2008.  Are these policies scheduled to end or be 
phased out by 31 December 2018?  Reply 
 This tax policy is a transitional preferential policy for foreign-invested enterprises after the implementation of the new Enterprise Income Ta x Law in 2008, and will be invalidated at the 
expiration of the transitional period. After that, foreign-invested enterprises will enjoy the same 
preferential enterprise income tax as that for domestic enterprises and there will be no tax preferential treatment tailored to foreign-invested  enterprises. As stated in China's notification, 
enterprises eligible for the preferential treatm ent of "5 years of exemption and 5 years of 
reduction by half" may continue to enjoy the treatment till its expiration on them, among these enterprises, for those that have not started to enjoy the treatment due to the fact that they have not begun to make profit, the starting year for them to enjoy the treatment shall be 2008. 
Therefore, the policy will expire on 31 December 2017 at the latest. 
 Question 2 
 
Over the last 8 years (2008-2015), has any stat istical data been produced to show the 
effect of such preferential tax policies on promoting and expanding international trade, 
specifically with regard to IC related pr oducts, smart devices,  smart phones, HDTV, 
electric cars, housing filters and industrial water refinery equipmen t? In addition, what 
has been the average annual rate of growth in foreign trade overall for the period 2008-
2015? 
 
Reply 
 
There has been no statistics on the implementing effect of preferential tax policies in China. 
Programme 9 in the Notification is the preferential  tax policies for Pudong area of Shanghai. This 
preference seems to have little relevance with pref erential tax treatment for international trade or 
                                               
1 G/SCM/Q2/CHN/58. 
2 G/SCM/N/220/CHN-G/SCM/N/253/CHN-G/SCM/N/284/CHN. G/SCM/Q2/CHN/65 
 
- 2 - 
 
  foreign trade growth. Please state the purpose and intention of this question, so that we could 
provide an answer.  Subsidy fund for the promotion of energy-saving products (p. 73) 
 
Question 3  
Could China please provide further details of exactly how the subsidy is provided? 
 Reply 
 
Grants are provided to the consumers purchasing  the efficient energy-saving products by the 
central finance, which will first be paid to the co nsumer by the producers, and then reimbursed by 
the financial departments to the producing enterprises. 
 
Question 4  
What requirements and conditions do efficien t energy-saving products have to meet in 
order to be subsidised? For example, is the subsidy programme confined only to 
products made in China?   
Reply 
 
The efficient energy-saving products for the purpos e of this subsidy program refer to the energy-
using products that are with higher energy effi ciency according to the national standards on 
energy efficiency while meeting the requirements of functions for use and quality. The efficient 
energy-saving products subject to financial subsidy shall meet the following conditions: (i) In 
compliance with national standards of energy effici ency, with grade 1 or 2 of  energy efficiency and 
other quality performances conforming to relevant national standards; (ii) With a certain quantitative scale of promotion; (iii) The actual selling price is no higher than the promotional price promised by the enterprise minus financial subsidy; (iv) With a unique and recognizable 
product code and product serial number, and with  both the external packing and product body 
marked by the logo and words of "People-benefi t Project of Energy-saving Products"; (v) The 
promotional enterprises have sophisticated after-sa le service system for fulfilling their promissory 
quality and services; (vi) The promotional enterprises have established product sales and user 
information management systems for providing relevant information according to requirements; and (vii) Other requirements specified in the implementation rules of product promotion.  
 
Question 5  If the enterprises manufacturing the above- mentioned products are located in foreign 
countries, how does the government reimburse the distributors or manufacturers? 
 Reply 
 Please refer to the reply to question 3.  
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