Free Trade Zone and Export Processing Zone

Item	Free-trade zone	Export processing zone
Corporate income tax	15%	Same as on the left
Imported materials for processing	Bond treated	Same as on the left
Import of equipment and related materials	Customs duty shall be exempted for production equipment, machinery, and office supplies necessary for the operation of those companies located in the zone	Same as on the left
Business line	Manufacturing company, trade, warehousing, logistics, and consulting	Export processing-based manufacturing companies and those forwarders and warehousing companies who provide them with services only
Sales of the products outside the zone	Domestic transport of the products is 100% permitted without obligation of minimum export quantity	Selling more than 30% of the products outside the zone is not allowed because more than 70% of the products are required for export
Customs duty/value added tax imposed when selling outside the zone	Sell the entire quantity of products manufactured outside the zone -> Tax imposition Those cases other than the above where the quantity, description, and price of imported raw materials contained in the products can be identified -> Impose taxes on raw materials	Impose taxes on the products
Processing in the zone of raw materials from outside the zone	VAT can't be refunded when cargo enter free trade zone unless cargo departed from China	Value added tax shall be refunded when the raw materials are carried in the zone
Commission of processing to outside the zone	Possible if the approval of the customs house is obtained	Possible
Export of the products through the zone	Possible to carry the cargoes outside the zone and into the zone and then export them as is	Prohibited
Transport of the products in the zone	A transportation company who has acquired a license in the free-trade zone and registered with customs undertakes the consignment	An expert transportation company who has acquired a license from customs and is established in the zone undertakes the consignment
Storage limitation of bonded cargo	Unlimited duration	Semi-annual notification to the customs house is required
Bonded cargo control	Bonded warehouse receiving register (EDI with the customs house)	Export processing zone border crossing cargo record statement (EDI with the customs house)
Control system	Free-Trade Zone Control Act	The interim provisions on monitoring and controlling export processing zone

*	The Free-Trade Zone Control Act is established in each individual free-trade zone and is not a law that covers all of the free-trade zones throughout China.