Shenzhen and Xiamen Further Encourage Equity Investment

By Dezan Shira & Associates

Posted: 17th February 2012 12:07

Local governments of several Chinese coastal cities are offering further incentives to equity investment enterprises, as private equity (PE) investment has emerged as one of the most important capital-raising avenues for small and medium-sized enterprises in those areas.

Shenzhen: PE Development Fund

 In order to offer various fiscal incentives to PE funds, Shenzhen established a PE Development Fund (PEDF) and recently clarified the operation procedures for PE funds that intend to apply for the financial support extracted from the PEDF.

According to the “Operation Procedures for PE Funds’ Application for the Use of the PEDF (shenfujinfa [2011] No.5)” and the “Regulations on Promoting PE Funds Development (shenfu [2010] No.103),” all types of Shenzhen-registered equity investment enterprises – regardless of whether they are Chinese-invested, foreign-invested or jointly-invested – will be able to apply for the use of the PEDF if they meet the following criteria corresponding to their own corporate nature:

Incentives offered to those PE funds include:

Xiamen: Government Guide Fund

In order to increase equity investment companies’ participation into encouraged industries, the Xiamen local government established the Government Guide Fund, a fund that will join and follow up desired PE investments and provide risk allowance to better secure investments.

According to the “Regulations on Promoting the Development of Equity Investment Enterprises (xiafu [2011] No.443),” Xiamen’s incentives offered to eligible equity investment enterprises include:

1) Amounting to 20 percent of the its local CIT contribution if the enterprise’s assets under management range betweenRMB200 million and RMB500 million

 2) Amounting to 30 percent of the its local CIT contribution if the enterprise’s assets under management range between RMB500 million and RMB1 billion

 3) Amounting to 50 percent of the its local CIT contribution if the enterprise’s assets under management exceed RMB1 billion

 

Dezan Shira & Associates is a specialized foreign direct investment practice, providing business and legal advisory, tax, accounting, payroll and due diligence service to multinationals investing in the emerging markets of Asia. Established in 1992, the firm is a leading regional practice in Asia with twenty offices in five jurisdictions, employing over 170 business advisory and tax professionals. For information or advice on establishing business operations in China, please contact Dezan Shira & Associates at info@dezshira.com or visit www.dezshira.com.

                                       

 


Related articles



Comments


close

Subscribe to our newsletter

Sign up here and get the latest news and updates delivered directly to your inbox

You can unsubscribe at any time