CHINESE
Nearly 16, 000 Enterprises Obtain New and High Technology Certificates and Enjoy 15% Preferential Income Tax Rate
 
05-14-2009
  According to the announcement of name list for high and new technology enterprises to be accredited by High and New technology Enterprise Certification Network under the Ministry of Science and Technology (MST), China has granted 15,991 enterprises high and new technology certificates by mid-April of 2009. Of these enterprises, 444 have passed the public notice period or are undergoing relevant procedures for public notice. The certified enterprises are entitled to preferential corporate income tax rate of 15%.
  The MST, Ministry of Finance (MOF) and State Administration of Taxation (SAT) collaboratively promulgated the Measures on the Accreditation and Management of High and New Technology Enterprises in April 2008, which demands re-accreditation of all existing high and new technology enterprises. The "high and new technology enterprise" stated in the Measures refers to resident enterprise that operates inside China (excluding Hong Kong, Macao and Taiwan) for more than one year after registration, engages in continuous R&D and technology transformation in the priority high and new-tech field supported by the State, has obtained core and independent intellectual property rights (IPRs) and conducts operational activities on that basis. Different from previous accreditation measures, the new measures underline and encourage innovations of enterprises, and consider R&D expenditure, intensity of R&D activities, as well as independent IPRs in particular core patent technology as major benchmark for enterprise appraisal.
  The year of 2008 and the past three month saw successive examinations, public notices and filing activities conducted nationwide on applying enterprises according to the new measures. Statistics of China Taxation News show that 61% of the accredited enterprises are located in the traditional high and new-tech enterprise hubs, namely Beijing, Shanghai, Jiangsu, Zhejiang (including Ningbo) and Guangdong (including Shenzhen). Of the enterprises, 2,634 are located in Beijing, 1,812 in Shanghai, 1,559 in Jiangsu, 1,949 in Zhejiang, and 1,837 in Guangdong. Enterprises passing public notice period all engage in the eight prioritized high and new technology fields supported by the State, and have independent IPRs for their products or services.
  According to regulations of the new Corporate Income Tax Law, the accredited high and new technology enterprises are entitled to preferential corporate income tax rate of 15%. Experts say that with the implementation of new Corporate Income Tax Law, the majority of existing preferential taxation policies have been cancelled. On the other hand, the preferential taxation policies for high and new technology enterprises, breaking through the previous restrictions that only enterprises located in high and new technology parks can enjoy preferential tax policies, have been expanded to become applicable nationwide. As a result, more enterprises have placed high and new technology enterprise accreditation work as a new strategic approach for future taxation planning.
  A survey on income tax relief in 11 provinces and cities including Jiangsu, Shanghai and Tianjin indicates that in 2008, the high and new technology enterprises nationwide benefited more considerably from preferential taxation policies as compared to 2007. Jiangsu Province took the lead in providing tax relief to high and new technology enterprises on a quarterly basis. Tax relief enjoyed by high and new technology enterprises under the management of national taxation authorities amounted to nearly RMB 3 billion. According to estimates from government department of Guangdong Province, in 2008, the high and new technology enterprises in Guangdong enjoyed corporate income tax relief to the amount of RMB 2.3 to 2.5 billion, representing a 50% plus increase over 2007. The 477 accredited high and new technology enterprises in Ningbo are estimated to be entitled to tax relief of over RMB 1 billion in 2008. The 208 accredited high and new technology enterprises in Hebei Province are estimated to be entitled to tax relief of over RMB 562 million in 2008, of which  RMB 200 million have already been paid. The 476 accredited high and new technology enterprises in Hubei Province are estimated to enjoy tax relief amounting to RMB 880 million in 2008.
  It is learned that besides the 15% corporate income tax rate, the high and new technology enterprises can also enjoy national and regional preferential policies such as pretax deduction amounting to 150% of R&D expenditure, introduction of talents, land deed tax relief and so on. Insiders reveal that the current accreditation system grants high and new technology enterprises bonus points in appraisals when participating large-scale bidding and tender projects and the Torch Program etc.
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