What is a Joint Venture?

A joint venture refers to an enterprise that is established as a legal person investor and invested by the state, enterprise, or individual. When setting up an enterprise, all assets invested by the owner are recorded as paid-in capital. ^[1]

Joint venture

A joint venture refers to an enterprise that is established as a legal person investor and invested by the state, enterprise, or individual. When setting up an enterprise, all assets invested by the owner are recorded as paid-in capital. ^[1]

Established in China

I. The Chinese enterprise consults with the company, obtains the manual, and understands the action process.

According to the "People's Republic of China Enterprise Income Tax Law", Article 3: Resident enterprises shall pay corporate income tax on income derived from China and abroad.

If a non-resident enterprise establishes an institution or a place in China, it shall pay enterprise income tax on the income derived from the territory of China from the institution or place it has established and the income that occurs outside of China but has actual connection with the institution or place that it has established. .

If a non-resident enterprise does not establish an institution or place in China, or if the income obtained by the non-resident enterprise has no actual connection with the institution or place it has established, it shall pay corporate income tax on its income derived from China.

Article 4 The corporate income tax rate is 25%.

The non-resident enterprise obtains the income stipulated in Article 3, paragraph 3 of this Law, and the applicable tax rate is 20%.

Article 19 A non-resident enterprise that obtains the income specified in Article 3, paragraph 3 of this Law shall calculate its taxable income according to the following methods:

(1) income from equity investment such as dividends and dividends, and interest, rent, and royalties, with the full amount of income as taxable income;

(2) for the income from the transfer of property, the balance of the total income minus the net property value shall be the taxable income;

Article 27 The following income of an enterprise may be exempted or reduced:

(1) Income from agricultural, forestry, animal husbandry and fishery projects;

(2) Income from investment and operation of public infrastructure projects supported by the state;

(3) Income from qualified environmental protection, energy saving and water saving projects;

(4) Income from qualified technology transfer;

(5) The income specified in Article 3, paragraph 3 of this Law.

Article 91 of the "Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China" Non-resident enterprises that obtain the income stipulated in Article 27 (5) of the Enterprise Income Tax Law shall be levied enterprise income tax at a reduced rate of 10%.

Several regulations on the capital contribution of the parties to a Chinese-foreign joint venture

(Approved by the State Council on December 30, 1987, issued by the Ministry of Foreign Trade and Economic Affairs and the State Administration for Industry and Commerce on January 1, 1988)

Article 1 These regulations are formulated in accordance with the Law of the People's Republic of China on Sino-foreign Joint Ventures and other relevant regulations in order to protect the legitimate rights and interests of all parties to the joint ventures (hereinafter referred to as joint ventures) and maintain social and economic order.

Article 2 The capital contribution subscribed by the parties to the joint venture in accordance with the provisions of the joint venture contract must be the cash, the industrial property, and the proprietary technology owned by the joint venturer's own cash, owned by him, and without any security interest.

Where capital is invested in kind, industrial property rights, or know-how, the investor shall issue a valid certificate of ownership and disposal.

Article 3 Either party to the joint venture shall not use the loans, leased equipment or other property acquired in the name of the joint venture, as well as the property of others other than the joint venturer, as its own capital, nor shall it use the property and rights of the joint venture or the property of the other party Equity guarantee for its capital contribution.

Article 4 The parties to a joint venture shall specify the period of capital contribution in the joint venture contract, and shall pay their respective capital contributions in accordance with the period stipulated in the joint venture contract. The investment certificate issued by the joint venture in accordance with relevant regulations shall be submitted to the original examination and approval authority and the industrial and commercial administration authority for the record. If the joint venture contract stipulates that the capital shall be paid in a lump sum, the parties to the joint venture shall pay off within 6 months from the date of issuance of the business license.

Where it is stipulated in the joint venture contract that the capital shall be paid in installments, the parties to the joint venture shall not contribute less than 15% of their respective capital contributions in the first installment and shall pay off within 3 months from the date of issuance of the business license.

Article 5 If the parties to a joint venture fail to pay their contributions within the time limit specified in Article 4, the joint venture shall be deemed to be automatically dissolved and the joint venture approval certificate shall automatically become invalid. A joint venture shall go through the procedures for cancellation of registration and cancellation of the business license with the administration for industry and commerce; if it does not go through the procedures for cancellation of registration and cancellation of the business license, the administration for industry and commerce shall revoke its business license and make an announcement.

Article 6 After the parties to the joint venture have paid the first phase of the investment and have exceeded any other period of capital contribution period stipulated in the joint venture contract for three months. The parties to the joint venture paid off their capital contributions within one month.

If the capital contribution is not paid in full within the notice period specified in the preceding paragraph, the original examination and approval authority has the right to revoke the approval certificate for the joint venture. After the approval certificate is revoked, the joint venture shall go through the cancellation formalities with the industry and commerce administration, pay off the business license, and clear the creditor's rights and debts; if it does not go through the procedures for cancellation and cancellation of the business license, the business administration shall have the right to cancel its business license Be announced.

Article 7 Failure to pay or pay off its capital contribution as scheduled in accordance with the provisions of the joint venture contract constitutes a breach of contract. The observant party shall urge the defaulting party to pay or pay off the capital contribution within one month. If the payment has not been made or paid in full within the time limit, the defaulting party shall be deemed to have renounced all rights in the joint venture contract and shall automatically withdraw from the joint venture. The observing party shall apply to the original examining and approving authority for approval to dissolve the joint venture or apply for another joint venture to bear the rights and obligations of the breaching party in the joint contract within one month after the overdue period. The observant party may require the defaulting party to compensate for the economic loss caused by non-payment or payment of the capital contribution.

If the breaching party in the preceding paragraph has already paid part of the capital contribution in accordance with the provisions of the joint venture contract, the joint venture shall clean up the capital contribution.

If the observing party fails to apply to the original examining and approving authority for the dissolution of the joint venture or to seek approval for another joint venture in accordance with the provisions of the first paragraph, the examining and approving authority has the right to revoke the approval certificate for the joint venture. After the approval certificate is revoked, the joint venture shall go through the procedures for cancellation of registration and cancellation of the business license with the administrative authority for industry and commerce; if it does not complete the procedures for cancellation of registration and cancellation of the business license, the administrative authority for industry and commerce shall have the right to revoke its business license and announce it.

Article 8 A joint venture that has obtained a business license before the date on which these regulations come into effect. If the parties to the joint venture or any of the parties fail to pay their capital in accordance with the investment period stipulated in the joint venture contract, they shall pay within two months from the date on which these regulations take effect The contribution that shall be paid in accordance with the contract.

Where the capital contribution has not been paid within the time limit specified in the preceding paragraph, it may be handled in accordance with the provisions of Articles 5 to 7 of these Provisions.

Article 9 For joint ventures that have obtained a business license before the date on which these regulations come into effect, if the parties to the joint venture have not specified their respective funding periods in the joint venture contract, and the capital contribution has not been paid off, the parties to the joint venture shall be on the date on which these regulations come into effect Within two months from the date of signing, a supplementary agreement on the joint venture contract regarding the time limit for the payment of capital by the parties to the joint venture shall be signed in accordance with these regulations, submitted to the original examination and approval authority for examination and approval, and filed with the industrial and commercial administration authority for record.

If the parties to the joint venture in the preceding paragraph fail to sign a supplementary payment agreement within two months and fail to pay off the capital contribution, resulting in the joint venture not being able to establish or start business for six months from the date of issuance of the business license, the original approving authority has The right to revoke the approval certificate for the joint venture. After the approval certificate is revoked, the joint venture shall go through the procedures for cancellation of registration and cancellation of the business license with the administration for industry and commerce; if it does not go through the procedures for cancellation of registration and cancellation of the business license, the administration for industry and commerce shall have the right to revoke its business license and make an announcement.

Article 10 The capital contributions of the parties to a Chinese-foreign cooperative enterprise shall be implemented with reference to these regulations.

Article 11 These Provisions shall be implemented as of March 1, 1988. ^[2]