Promulgation Authorities： Ministry of Finance , State Administration of Taxation
Release Date： 2020.07.13
Effective Date： 2020.01.01
Doc Number： Cai Shui [2020] No. 38
Notice of the Ministry of Finance and the State Taxation Administration on Corporate Income Tax Policies for Key Industries in Lingang New Area of the China (Shanghai) Pilot Free Trade Zone
Cai Shui [2020] No. 38
Shanghai Municipal Finance Bureau and Shanghai Municipal Tax Service, State Taxation Administration,
Pursuant to the relevant requirements of the Notice of the State Council on Promulgation of the General Scheme for Lingang New Area of China (Shanghai) Pilot Free Trade Zone (Guo Fa [2019] No. 15), notice is hereby given on corporate income tax policies for key industries in Lingang New Area of China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the "New Area") as follows:
I. Any qualified enterprise as legal person in the New Area engaging in the relevant product (technology) business in a core link of a key area such as integrated circuit, artificial intelligence, biomedical, civil aviation etc, and carrying out substantive production or research and development activities shall be subject to corporate income tax at a reduced tax rate of 15% within five years from the date of establishment.
II. For the purpose of this Notice, a "qualified enterprise as legal person" shall satisfy all the following criteria in item (I) and item (II), and any sub-criteria in item (III) or item (IV) at the same time:
(I) It shall an enterprise as legal person registered in the New Area from January 1, 2020 (excluding enterprises relocating to the New Area from other areas), with main businesses of substantive production or research and development activities in the relevant fields and links in the Catalogue of Core Links in such Key Sectors as Integrated Circuit, Artificial Intelligence, Biomedicine and Civil Aviation in the New Area (hereinafter referred to as the "Catalogue").
Substantive production or research and development activities shall mean that an enterprise has fixed production and business premises, fixed staff, possesses software and hardware support conditions which are compatible with its production or research and development activities, and carries out the relevant businesses on this basis.
(II) At least one key product (technology) is included in the product mainly researched and developed or sold by the enterprise.
Key products (technologies) refer to the products (technologies) that play an important role or are indispensable in the industrial chain in such key fields as integrated circuit, artificial intelligence, bio-medicine and civil aviation.
(III) Conditions for investors in the enterprise:
1. Investors in the enterprise shall rank high in terms of influence in the international segment market and rank high in terms of technical strength; and
2. Investors in the enterprise shall take a leading position in the domestic segment market and take the lead in terms of technical strength.
(IV) Conditions for the research, development and production of the enterprise:
1. The enterprise shall have leading talent and core team backbones, and shall have engaged in scientific research and production in relevant fields at home and abroad;
2. The enterprise shall possess core and key technology and be capable of establishing independent intellectual property rights system with respect to its main products;
3. The enterprise shall have the ability to promote the diversification of core suppliers in the industrial chain and drive the upgrading of domestic industries;
4. The enterprise shall have high-end supply capacity, its core technical indexes shall be internationally leading or domestically leading;
5. The enterprise's research and development achievements (technologies or products) shall have been adopted by the international and domestic front-line terminal equipment manufacturers or the enterprise shall have carried out close substantive cooperation (including capital, scientific research, project, etc.); and
6.The enterprise shall have obtained national or provincial government technology or industrialization special funds, government investment funds or investment from well-known investment and financing institutions.
III. The Shanghai municipal finance and taxation authority shall, in conjunction with the authorities in charge of relevant industries, formulate specific operational and administrative measures for the identification of enterprises in key industries and shall file the same with the Ministry of Finance and the State Taxation Administration for the record.
IV. This Notice shall come into force as of January 1, 2020. Qualified enterprises as legal persons which were registered in the New Area before December 31, 2019 and engage in substantive manufacturing or research and development activities in respect of the businesses set out in the Catalogue may comply with this Notice during the period from 2020 to the time when they have established for five years.
Ministry of Finance
State Taxation Administration
July 13, 2020
