To encourage foreign-invested enterprises to introduce advanced foreign technologies and equipment, to promote industrial restructuring and technological upgrading, and to maintain sustained, rapid and healthy development of the national economy, the Chinese government has stipulated in recent years a series of favorable policies to invite foreign investment in high technology industries. These policies are mainly as follows:
9). In accordance with the articles concerning donations in the Income Tax Law of the People‘s Republic of China for Enterprises with Foreign Investment and Foreign Enterprises, the foreign-invested and foreign enterprises who provide financial aid to non-affiliated scientific and research institutes or schools of higher learning for their research and development projects can deduct the entire amount of the aid from their taxable income. 8). If the expenditure on technology development of enterprises with foreign investment increases by 10 percent or more over that of the previous year, the taxable income of the enterprises for the current year can, with the approval of the taxation authorities, be set off by 50 percent of the actual amount of the spending on technology development. 7). the incomes of foreign-invested enterprises and research and development centers and foreign enterprises and individuals obtained from technology transfer and development and related technological consultation and services shall be exempted from business tax. 6). If enterprises with foreign investment under the encouraged or the restricted-B categories purchase within the total amount of their investment China-made equipment that is listed under imports for import duty exemption, the enterprises can obtain a full refund of domestic equipment value-added tax on the equipment they have purchased. When enterprises with foreign investment purchase China-made equipment for the purpose of technological upgrading in conformity with the state industrial policy or for producing high-technology products, the cost of the equipment can offset the business income tax of these enterprises. 5). In cases where the tax refund rate on products listed under the Catalogue of the State High and New Technology Export Commodities is not up to the tax rate, a tax refund can be proceeded in accordance with the tax rate and existing regulations concerning tax refunding on exports, after the above-mentioned products are exported and upon approval by the State Bureau of Taxation. 4). Self-use equipment and supporting technologies, parts and spares imported by foreign-invested research and development centers within the total amount of their investment shall be exempted, in accordance with relevant regulations, from the import tariff and import-stage value-added tax, if the imports cannot be produced domestically or the features and functionality of domestic products cannot meet requirements. 3). Advanced technologies listed under the Catalog of the State High and New Technology Products introduced by enterprises with foreign investment, and their outbound payment made on the software in accordance with the contract shall be exempted from tariff and import-stage value-added tax. 2). Self-use equipment and supporting technology, parts, spares and other accessories as clarified in the contract, imported by enterprises with foreign investment for the production of the products listed under the Catalogue of the State High and New Technology Products, shall be exempted, in accordance with relevant regulations, from the import tariff and import-stage value-added tax. 1). Self-use equipment and supporting technologies, parts and spares imported for technological upgrading within their previously approved scope of production and operation by foreign-invested enterprises under the encouraged or restricted-B categories, foreign-invested research and development centers, foreign-invested enterprises producing for export and technologically advanced foreign-invested enterprises shall be exempted from the import tariff and import-stage value-added tax, if the equipment and supporting technologies, parts and spares cannot be produced domestically or the features and functionality of domestic products cannot meet requirements. 
