Longhai, in Zhangzhou municipality, is offering a profit tax rebate as an incentive to lure foreign investment. Foreign joint ventures which invest US$30 million or more and those with a payback period of at least 15 years can enjoy a preferential profit tax rate of 15 per cent, the same as China's special economic zones. Zhangzhou charges a corporate profit tax rate of 24 per cent for foreign-funded manufacturing ventures. Acting mayor Kang Junfu said all foreign-funded joint ventures were eligible for the 15 per cent profit tax rate since its introduction last year. The move came as the State Administration of Taxation unified the state tax items and banned tax incentives offered by regional governments from the beginning of this year. In Longhai, a county-grade city, joint ventures are levied 24 per cent profit tax, but they are refunded 9 per cent by the local government. Mr Kang said the tax rebates were subsidised by the city's coffers, so it would not affect the central government's share of revenue. Based on the 30.8 million yuan (about HK$28.64 million) profit tax collected from foreign-funded ventures last year, a 9 per cent rebate would cost 2.8 million yuan in revenue. Mr Kang said instead of a financial burden on the city, the rebate would help foster its economic development. Longhai attracts the most foreign investment in Zhangzhou. Foreign investors include two of Taiwan's biggest manufacturing groups - Formosa Plastics Group, which has invested in the US$3.5 billion Houshi Power plant, and President Food, which has formed a $160 million tin-plate joint venture. 'We can compensate for the loss with other channels,' Mr Kang said. He cited the 3,600 MW Houshi Power Plant as an example, which will have annual industrial output of more than three billion yuan when it is fully operational. 'Beijing allows us to charge a 17 per cent value-added tax on the sale of electricity. Therefore, this indirect tax will bring us more than 510 million yuan in revenue,' he said.