Joint Ventures
BIZCHINA / Company laws
Law of the People's Republic of China on Chinese-Foreign Contractual
Joint Ventures
Updated: 2006-04-18 09:49
Article 15. A contractual joint venture must establish its account books
within the territory of China, file its accounting statements according
to relevant provisions and accept supervision by the financial and tax
authorities.
If a contractual joint venture, in violation of the provisions prescribed
in the preceding paragraph, does not establish its account books within
the territory of China, the financial and tax authorities may impose a
fine on it, and the administrative authorities for industry and commerce
may order it to suspend its business operations or may revoke its
business license.
Article 16. A contractual joint venture shall, by presenting its business
license, open a foreign exchange account with a bank or any other
financial institution which is permitted by the exchange control
authorities of the state to conduct transactions in foreign exchange.
A contractual joint venture shall handle its foreign exchange
transactions in accordance with the provisions of the state on foreign
exchange control.
Article 17. A contractual joint venture may obtain loans from financial
institutions within the territory of China and may also obtain loans
outside the territory of China.
Loans to be used by the Chinese and foreign parties as investment or
conditions for cooperation, and their guarantees, shall be provided by
each party on its own.
Article 18. The various kinds of insurance coverage of a contractual
joint venture shall be furnished by insurance institutions within the
territory of China.
Article 19. A contractual joint venture may, within its approved scope of
operation, import materials it needs and export products it produces. A
contractual joint venture may purchase the raw and processed materials,
fuels, etc.needed, within its approved scope of operation, on the
domestic market or the world market, according to the principles of
fairness and reasonableness.
Article 20. A contractual joint venture shall, in accordance with state
provisions on tax, pay taxes and may enjoy the preferential treatment of
tax reduction or exemption.
Article 21. The Chinese and foreign parties shall share earnings or
products, undertake risks and losses in accordance with the agreements
prescribed in the contractual joint venture contract.
If, upon the expiration of the period of a venture's operation, all the
fixed assets of the contractual joint venture, as agreed upon by the
Chinese and foreign parties in the contractual joint venture contract,
are to belong to the Chinese party, the Chinese and foreign parties may
prescribe in the contractual joint venture contract the ways for the
foreign party to recover its investment ahead of time during the period
of the venture's operation. If the foreign party, as agreed upon in the
contractual joint venture contract, is to recover its investment prior to
the payment of income tax, it must apply to the financial and tax
authorities, which shall examine and approve the application in
accordance with state provisions concerning taxes.
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