Dalian Free Trade Zone

Dalian Free Trade Zone, the only one of its type in Northeast China, offers an easy access to Chinese market and lowers your cost of investment in China. Manufacturer, importers and exporters are given the unique opportunity to apply innovative solutions to the many challeges associated with doing business with and in China.

Though it is located inside China, Dalian Free Trade Zone is considered to be outside the Chinese Customs territory. Thus any goods that enter China through Dalian Free Trade Zone are not assessed Customs duties until after they leave the Zone for China consumption. Companies inside the Zone benefit from simplified customs procedures, liberal foreign exchange privileges and absence of export quotas and other requirements on imports.

From merely storing or exhibiting imported goods to complex manufacturing processes integrating domestic and foreign materials, the economic legal entities and natural persons from both home and abroad are eligible to carry out their operations in the Zone which will allow them to defer, reduce or even eliminate duties on imported goods.

Functions of Dalian Free Trade Zone
    1) International trade and bonded exhibition for imports
    2) Storage, distribution and logistics
    3) Manufacturing, processing and packaging

The current situation of the Zone:
    About 500 million RMB has been realized on the infrastructure. The heating boiler of 10 tons and power substation of 6.6 KVA are in operation. The roads built in the Zone add up to 7.3 kilometers. Trees and grass have been planted on 53 thousand square meters. The underground pipes of all kinds add up to 62 kilometers.
    Of 2183 firms registered with Dalian Free Trade Zone, 816 are foreign-funded, which are from such countries and regions as Hong Kong, United States, Japan, Korea, Singapore, Taiwan and Canada.

Bonded commodities markets in the Zone
    There are 5 bonded commodities markets in the Zone: Automobile Exchange Center, Building and Decoration Materials Market, Petro-Chemical Products Markets, Electronic Products Markets, and Regenerative Resouces market. Sales to customers in China proper can be conducted through one of these markets, which clear goods through the Customs. There are about 200 members all together.

Main Preferential Policies
    1) Regarding duties and taxes
    *The processing industries are exempt from Customs duties and import taxes for imported capital equipment and office necessites.
    *Goods entering DFTZ from or leaving DFTZ for foreign countries are free form duties, quotas or import or export permits.
    *Goods may have export drawback upon entering Dalian Free Trade Zone from dutiable area.
    *Enterprises registered with Dalian Free Trade Zone for an operation of 10 years or more are entitled to a 15% income tax rate and are eligible for One-year-free-two-year-half* income tax policy while the income tax holidays for processing industries are two years and 50% income tax rate will be applied for the ensuing three years. The income tax rate for processing enterprises that export 70% or more of its output is 10%.
    2)Regarding operation
    *Investors from both home and abroad share the same policies.
    *Foreign companies are allowed to set up trading companies in the Zone.
    *Trading, processing, warehousing and distribution may be conducted under one legal entity.
    *Both bonded and non-bonded goods can be stored in the zone and there is no time limit to warehousing bonded items in the Zone.
    3)Regarding export processing
    *The State encourages export processing companies to operate in Free Trade Zone.
    *If the finished products are made up of imported raw materials or components together with domestic items, the Customs duties or import taxes may be levied on the imported components or raw materials rather than finished products when the finished products go for domestic consumption.
    *Imported raw materials and components coming from abroad for export processing are duty free with no bank guarantee deposit required as in the case in dutiable areas.
    *Value added taxes are not applicable for export processing in the Zone.
    *Companies in the Zone may purchase raw materials and components from dutiable areas. After processing, the products can be cleared of the Customs and then shipped abroad. A certain proportion may be sold for domestic consumption.
    4) Regarding foreign currencies.
    *The companies in the Zone can settle the account in either RMB or foreign currencies, which is at their disposal.
    *DFTZ enterprises are eligible to open foreign currency account either with financial institutes within DFTZ or with foreign banks in dutiable areas.
    5)Others
    *The enterprises that trade through DFTZ Bonded Commodities Markets may enjoy some governmental subsidies, the amount being in proportion of the tax that has been paid.
    *Customs clearance can be made after the exhibited imported goods are sold domestically.