Foreign manufacturers established in these zones receive tax holiday
on profits for the first 3 to 5 years of operation.
However, they are required to pay duty on imported materials
and 17% VAT on the sale of all merchandise.
If the merchandise
is exported, the FIE can receive 13% VAT refund.
Originally, China opened 3 SEZ’s. Today many local cities and
towns operate SEZ/s to attract foreign investment.
There are 15 Free Trade Zones (FTZ) and 3 Export Processing Zones (EPZ).
The 12 coastal zones are shown on the map to the right.
FIE’s located in these zones do not pay VAT on exported goods
and they can import materials duty free that are used to process
exported products. FTZ,s offer the same 3 -5 year
tax holiday on profits and the same business options as SEZ’s.