PRC, Small and Medium-sized Enterprise Promotion Law

Promulgated: June 29 2002
Effective: January 1 2003

Main contents: The Law contains seven parts dealing with funding assistance, business establishment support, technological innovation, market development and social support.
Article 10 requires that the central government budget include funding for assisting small and medium-sized enterprises. Article 12 states that a national fund for small and medium-sized enterprises shall be established, and that tax policy will encourage donations to the fund. Article 14 stipulates that the People's Bank of China will strengthen credit policy in order to improve financing possibilities and will encourage commercial banks to do likewise. Article 17 provides that tax policy will encourage venture capital agencies to invest in small and medium-sized enterprises.
Part Three provides for preferential tax benefits for small and medium-sized enterprises providing employment to a high number of minorities or previously unemployed persons (Article 24), and requires government agencies to efficiently carry out registration of enterprises (Article 26). Part Four states that enterprises producing technologically innovative products or accessories for larger enterprises shall be eligible for preferential loans (Article 29), while the government shall also provide funds and land for technological research facilities and incubation centres (Article 30).
Part Five states that the government shall assist firms in the rearrangement of assets through the merger and acquisition of enterprises (Article 33). Government procurement will also give precedence to products or services produced by small and medium-sized enterprises (Article 34).