Shenzhen Investment Service
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1. General industries
A. For foreign-invested enterprises, corporate income tax rate is decreased from the original 30% down to the present 15%, while the local income tax levied at the rate of 3% is exempted.
B. Foreign-invested manufacturing enterprises can enjoy 2 years of corporate income tax exemption and half reduction for the ensuing 3 years according to the regulations of the tax law. Certified export-oriented enterprises at the expiration of tax exemption and reduction period enjoy a reduced rate of 10% for corporate income tax provided the export volume accounts for 70% or above of the total industrial output. Certified manufacturing enterprises using state-of-the-art technologies at the expiration of tax exemption and reduction period are entitled to a reduced tax rate of 10% for a 3-year extension.
C. Half of the land use fee for the land for industrial use utilized by certified export-oriented enterprises will be exempted. Half of the land use fee for the certified enterprises using state-of-the-art technologies will be exempted for 5 years.
D. The foreign-invested enterprises engaged in the service sector with an investment of over US$ 5 million and operation duration of over 10 years can enjoy 1 year of corporate income tax exemption from the profit-making year and half reduction for the ensuing 2 years.
E. Sino-foreign equity joint ventures engaged in port and dock construction projects with operation period of over 15 years may enjoy the exemption of corporate income tax for the first 5 years from profit-making year and half reduction thereof for ensuing 5 years after their applications are approved.
2. Integrated circuits industry
A. For integrated circuits manufacturing enterprises, from their being certified until the end of 2010, simultaneous levy and refund will be applied to the part exceeding 6% of the total VAT paid by integrated circuit manufacturers that are general taxpayers of VAT at the statutory tax rate of 17% for the sales of self-produced integrated circuit products. The refunded tax shall be used by the enterprises for R&D of IC products and expanded reproduction, and shall not be subject to the levy of corporate income tax.
B. Accelerated depreciation can be applied to the production equipment of IC manufacturers. The shortest depreciation term of the production equipment of IC manufacturers can be three years after being approved by authoritative organizations in case of domestically-invested enterprises, and by the State Administration of Taxation in case of joint-venture or exclusively foreign-invested enterprises.
C. For the preferential tax policies applied to the IC manufacturing enterprises set up in Shenzhen, please refer to those applied to the foreign-invested enterprises engaged in construction of ports, wharves, energy and traffic projects with a duration of over 15 years, namely, these enterprises can enjoy 5 years of corporate income tax exemption from the profit-making year and half reduction for the ensuing 5 years upon enterprise application and authorization by taxation authorities.
D. IC manufacturing enterprises can set aside 15% of its yearly net sales as R&D fee. If the R&D fee drawn is not used up in the current year, the balance may be carried over to the next year. If the investment of an enterprise in R&D exceeds the amount of R&D fee drawn, the exceeding part may be stated as R&D expenses.
E. Self-use raw materials and consumables for production imported by integrated-circuit manufacturing enterprises are exempt from tariff and import-related VAT.
F. Integrated circuit technologies, complete set of production equipment, equipment and apparatuses specially for integrated circuit imported by integrated-circuit manufacturing enterprises are exempt from tariff and import-related VAT, and this is not applied to the commodities listed in the Catalog of Non-Tax-Free Imported Commodities for Foreign-Invested Projects and the Catalog of Non-Tax-Free Imported Commodities for Domestically-Invested Projects stipulated by the State Council's Guofa [1997] No. 37 Document.
G. For the IC manufacturing enterprises with an investment of over RMB 8 billion or IC line width less than 0.25um, the preferential taxation policies for those foreign-invested enterprises engaged in energy and traffic prevail; the imported self-use raw materials and consumables for production shall be exempt from tariffs and import-related VAT.
H. Integrated circuit technologies, complete set of production equipment, equipment and apparatuses specially for integrated circuit imported by certified integrated circuit manufacturing enterprises are exempt from tariff and import-related VAT, and this is not applied to the commodities listed in the Catalog of Non-Tax-Free Imported Commodities for Foreign-Invested Projects and the Catalog of Non-Tax-Free Imported Commodities for Domestically-Invested Projects stipulated by the State Council's Guofa [1997] No. 37 Document.
I. Shenzhen Integrated Circuit Industrial Park is under planning with the first phase of construction of 3-5 square kilometers. The certified integrated circuit manufacturing enterprises within the Industrial Park will be exempt from the remuneration for assignment of the right to the use of land, municipal supporting facilities fees and land development fees.
J. If the domestic and foreign senior professional technical and managing personnel engaged by integrated circuit manufacturers purchase commodity residential houses in Shenzhen, the payment for such houses may set off their taxable income and the method of refund after levy may be adopted.
K. If the domestic and foreign senior professional technical and managing personnel and their families needed by integrated circuit manufacturers settle in Shenzhen, they shall be free from the restriction of the norm of registered permanent residence of Shenzhen and enjoy exemption of city infrastructure expansion fee.
L. Integrated circuit design enterprises are regarded as software enterprises, and enjoy the relevant taxation policies for the software enterprises.
3. Software industry
A. By 2010, simultaneous levy and refund will be applied to the part exceeding 3% of the actual VAT paid by the general taxpayers of VAT at the statutory tax rate of 17% for the sales of self-produced software products. The refunded tax shall be used by the enterprises for R&D of software products and expanded reproduction, and shall not be subject to the levy of corporate income tax.
If the general taxpayers of VAT export products of localized transformation such as conversion of imported software, the exported software may enjoy the simultaneous levy and refund policy according to the standards for self developed and produced software products.
B. Certified new software enterprises may enjoy 2 years of corporate income tax exemption from the profit-making year and half reduction for the ensuing 3 years. Software enterprises included in the country's planning or key software enterprises defined by provincial and municipal governments enjoy 5 years of corporate income tax exemption and half reduction for the ensuing 5 years. For the corporate income tax paid for the third to fifth year which is levied at half reduced rate, the municipal financial authority shall provide corresponding allowance.
C. The pay and training expenditures of software manufacturing enterprises can be deducted from the taxable income according to the actual sum.
D. If key software enterprises included in the country's planning did not enjoy tax incentives in the current year, the corporate income tax shall be levied at the deducted rate of 10%.
E. The self-use equipment, technologies (including software), accessories and parts imported together with the equipment according to the contract that are imported by software enterprises are exempt from tariff and import-related VAT, and this is not applied to the commodities listed in the Catalog of Non-Tax-Free Imported Commodities for Foreign-Invested Projects and the Catalog of Non-Tax-Free Imported Commodities for Domestically-Invested Projects.
F. Software enterprises are encouraged to pass international qualification certifications such as GB/T19000-ISO9000 certification or CMM certification. The Municipal Foreign Trade Development Fund supports those enterprises that have passed international qualification certification over CMM-2.
G. Shenzhen has established software enterprise development center. The government shall provide subsidy to new software enterprises entering the center from special fund for science and technology.
H. Software system analysts and system engineers engaged in software work and software development personnel with university education or above, or college education or above and semi-senior professional titles or above or with important inventions and creations, their spouses and minor children are allowed to settle in Shenzhen (irrespective of transfer with spouse or work transport) and exempted from city infrastructure expansion fee.
I. For the software purchased by enterprises and institutions if the purchase cost attains the standard of fixed assets or the software forms a part of intangible assets, the software can be calculated according to fixed assets or intangible assets. For domestically-invested enterprises, this shall be reported to the tax authority for approval; for the foreign-invested enterprises with a total investment of over USD$ 30 million, this shall be reported to the State Administration of Taxation for approval; for the foreign-invested enterprises with an investment of less than USD$ 30 million, this shall be reported to the tax authority for approval, and its depreciation or amortization duration can be shortened as short as 2 years.
4. Logistics
A. For the logistic distribution centers and logistic enterprises set up in the 6 major logistic parks of Shenzhen, the price of land for their new constructions shall be charged at a preferential rate of 20%; for the projects in Sungang Logistic Park, the charge can be collected respectively at 50% of commercial and warehousing counterparts, for the projects in the other 5 logistic parks, the charge can be collected respectively at 25% and 75% of commercial and warehousing counterparts; the land price for logistic distribution projects can be paid in installment, with the maximum duration of 3 years. For the electricity used for the large-sized refrigerated warehouses and distribution centers of commercial, trade and circulation enterprises, the charge can be collected as per the standards for industrial electricity charging rate.
B. Enterprises for certified key logistic projects will enjoy preferential policies in using land and electricity, and can use "green channel" during project setup and construction with fast approval process.
5. Finance
A. Financial agencies with headquarters or regional headquarters in Shenzhen can enjoy a one-time subsidy from the special-purpose fund as per the standard of 1000 yuan per square meter for their new office buildings.
B. Educational departments will give support to senior management personnel of financial agencies in terms of their children's schooling, and municipal and district educational department shall arrange for their children to study in key schools. Upon approval by relevant departments, the children of foreigners can enjoy the preference to study in Shenzhen's international schools or other schools.
C. Sino-foreign joint venture or foreign banks established in Shenzhen Economic Special Zone with a total investment of over USD$ 100 million and a duration of over 10 years may enjoy 1 year of corporate income tax exemption from the profit-making year and half reduction for the ensuing 2 years; their income from financial business can enjoy 5 years of business tax exemption from the opening day.
6. Venture investment
A. If venture investment agencies invest in the projects listed in the Guide to Venture Capitals' Investment in Hi-Tech Industries, and the total investment exceeds its registered capital or accounts for 70% of its total investment, and no less than 30% is invested in startup enterprises, then the venture investment agencies will enjoy the preferential policies for hi-tech enterprises.
The accumulated investment specified in the previous clause shall include the sum refunded and realized investment from invested enterprises within 5 years on calculation; and the investment by venture investment agencies shall be calculated according to the actual invested sum.
B. Venture investment agencies can draw risk compensation fund as per 5% of the yearly gross income to compensate for the investment losses of preceding years and the current year; the balance of the risk compensation fund can be carried forward to the next year, however, the total sum shall not exceed 10% of the net assets of the venture investment agencies in the year.
C. If venture investment agencies invest in Shenzhens hi-tech industries and other technological innovation industries, and the sum exceeds 70% of their investment, the agencies can enjoy the relevant preferential policies of Shenzhen upon approval by the technological authority of the Municipal Government.
D. From 2000 on, the municipal finance would prepare 10 million yuan, while the ?Three funds for technologies? would prepare 20 million yuan every year to encourage overseas students to start up their businesses in Shenzhen. First, the special-purpose fund will be used to set up and improve the Overseas Students Venture Park in the Hi-Tech Industrial Park; second, the fund will be used for preferential discount of loans for the hi-tech enterprises set up by the overseas students.
E. The following encouraging policies will be employed for overseas students to undertake scientific research, investment and establishment of all kinds of industries in Shenzhen: those engaged in scientific research with research subjects certified by the Municipal Technological Bureau as hi-tech projects can obtain one-time scientific research startup subsidy of RMB 100-150 thousand yuan;
Authorities shall actively support those overseas students engaged in go-between services such as evaluation, consultation and advising, or third industries. Overseas students will enjoy preferential policies for their investments in domains except those forbidden by the country.
In case of becoming a partner with patent or non-patent technological results, the evaluation of technological result can account for 25% of the registered capital, upon the certification by the Municipal Technological Bureau, the evaluation of hi-tech results can account for 35% of the registered capital. Other forms can be undertaken if there are additional agreements between the partners.
F. Venture investments are encouraged to foster venture investment market. Overseas and domestic investors are encouraged to set up venture investment agencies in Shenzhen. If venture investment agencies invest in the projects in compliance with Shenzhen's hi-tech industry direction, the accumulated sum exceeds their registered capital or exceeds 70% of their investment, and no less than 30% is invested in startup enterprises, the agencies can enjoy the relevant preferential policies of Shenzhen. For those hi-tech projects in compliance with the government's direction, especially those incubation projects, the municipal technological development fund will adopt multiple forms to inject matching investment to the venture investment agencies. Warranty compensation fund and re-warranty system will be set up to encourage the warranty agencies set up by governmental and social capitals to give more support to the technological innovations of medium and small-sized technological enterprises.
G. Expand the space of software and technology incubator through "reconstruction of workshops and replacement of industries". The Municipal Government will arrange for special-purpose funds, while district governments and relevant enterprises will contribute at a proportion of no less than 1: 2 to reconstruct the existing old workshops into software parks and technological incubators.
H. Support the development of incubators. A maximum of 3 million yuan will be subsidized to the technological enterprise incubators certified by the technological authority of the Municipal Government, so as to support the construction of public facilities of the technological enterprise incubators such as public service platform, network communications, and facilities and instruments for professional labs. The Municipal Government will invest to set up professional biological incubators.
I. The Municipal Government will arrange for a proportion of the ?Three funds of technology? to serve as the special-purpose fund for construction of technological enterprise incubators, and subsidize on a one-time basis those certified technological enterprise incubators. The subsidy for each technological enterprise incubator shall be 20% of its total investment, and the maximum sum shall be RMB 3 million yuan.
J. The certified technological enterprise incubators shall be subsidized by the municipal finance from the day being certified by referring to the supporting policies for hi-tech enterprises.
K. According to the actual conditions, accelerated depreciation can be applied to the public service facilities of technological enterprise incubators upon approval by the tax authority according to related regulations, thus advancing the update and innovation of technological enterprise incubators.
L. In terms personnel transfer, graduates assignment, residence registration and procedures for going abroad or to Hong Kong and Macao, the enterprises to be incubated in the technological enterprise incubators will enjoy the preferential policies for the hi-tech enterprises of Shenzhen.
7. Processing with imported material
A. Except the commodities listed in the Catalogue of Import Commodities for Foreign-invested Projects Not Exempted from Import Tariff, the unpriced equipment provided by foreign investors for processing with imported material shall be exempted from customs duty and import-related value added tax.
B. Except for the projects otherwise specified by the state, the imported materials and parts for processing with imported materials shall not be subject to quota permit management in principle.
C. The materials and parts imported by enterprises of category A for processing with imported materials shall be held by the customs in bond and not subject to bank security deposit account system. The materials and parts imported by enterprises of category B for permitted processing with imported materials shall be subject to "idling" bank security deposit account system.
D. An enterprise engaged in processing with imported materials that pay annual processing fees of over HKD 1 million may apply for direct cargo transport between Shenzhen and Hong Kong & Macao.
8. Public utilities
The government encourages social funds and overseas capitals to construct public utilities by means of solely-funded enterprises, joint-venture enterprises, cooperation, and so on, and to undertake franchised operations of public utilities.
Enterprise service
1. The large-sized enterprises to enjoy the direct services shall comply with one of the following conditions:
* Enterprises registered and operated in Shenzhen with a sales amount of over RMB 3 billion yuan or export value of over USD$ 200 million or amount of tax payment of over RMB 200 million in the previous year;
* World top 500 enterprises investing in Shenzhen;
* China top 100 electronic and information enterprises of 2003 and Guangdong's 500 largest industrial enterprises of 2002 investing in Shenzhen;
* Financial enterprises (including banking, insurance and securities) headquartered in Shenzhen;
* Other enterprises of advantages to be supported in the light of Shenzhen's economic development strategy.
2. Service items:
* The related functional departments of the Municipal Government will set up a window to serve large-sized enterprises by providing them with services concerning business application, consultation, guidance, supervision, and complaint acceptance.
* The functional departments shall appoint dedicated people to coordinate the services to be provided to large-sized enterprises.
* The Municipal Government shall appoint dedicated people to coordinate the services to be provided to large-sized enterprises spanning the functional departments of the government.
* For the projects to be approved by the country, the Foreign Economic and Trade Bureau and the Development Planning Bureau shall send dedicated people to the Ministry of Commerce and the State Development and Reform Commission to coordinate the enterprises to handle the related approval procedures.
3. Intellectual property right
1). The related departments of the government shall regularly or irregularly organize activities to crack down on smuggled and pirated software, and employ rigorous measures to punish the activities to manufacture and sell pirated software.
2). The government encourages enterprises and individuals to apply for patents, and endow them with certain financial support:
For domestic invention patents, two-time payment can be made to the application for subsidy according to the progress of acquiring the certificate of patent;
When the applicant requests material check and has paid related fees, RMB 2200 yuan (same below) shall be paid (however, for those patents approved by the State IPR Bureau and Patent Bureau for delay of paying fees with a lower payment than the subsidized sum, the subsidy will be given according to the actual payment for patent application fees and check fees);
Each patent will be subsidized RMB 1500 yuan after the certificate of patent is got; for those entrusted to patent agencies, an additional RMB 1700 yuan will be subsidized.
For the patents of utility model in listed in the Catalog for Shenzhen's Hi-Tech Products, one-time subsidy of RMB 600 yuan will be subsidized apiece after the certificate of patent is got.
For foreign patents of invention, one-time subsidy will be given according to two grades in terms of different countries and regions after the certificate of patent is got (at most 2 countries or regions may be subsidized apiece): the patent got in countries such as the U.S.A., the EU and Japan will be subsidized 50000 yuan apiece; and the patent got in countries and regions with patent approval institutions will be subsidized 30000 yuan apiece.
Section IV Talent
Give play to the role of the city's colleges and universities, Shenzhen College Town, and other higher education institutions, cooperate with famous domestic and overseas universities to jointly establish schools, and place emphasis on fostering high level talent urgently needed by industrial development. The Municipal Government will subsidy the postdoctoral scientific research workstations approved by the country, and subsidy each post doctor with 50000 yuan each year after he (she) enters the postdoctoral scientific research workstation.
The Municipal Government has set up scientific and technological awards, including Shenzhen Mayor Award, Shenzhen Scientific and Technological Progress Award and Shenzhen Technological Invention Award. Each year, 8 million yuan is arranged to reward those technological personnel with outstanding contributions to the development of the city's hi-tech industries.
Section V Others
* Enterprises are encouraged to invest more in R&D. The total R&D expenditures of hi-tech enterprises can be included in their costs. If the expenditures accrue by 10% (including 10%) than the previous year, and they are in compliance with the country's tax laws and regulations, then an additional 50% of the expenditures is, upon the approval by the taxation authority, allowed to be deducted from the taxable sum of the year.
*If a non-governmental technological enterprise has been put into operation for over 2 years with integrated management system, and a yearly payment of tax of over RMB 200 thousand yuan, its employees in compliance with the related regulations of the SEZ can apply for permanent residence in the city. The number will be determined by the sum of the paid tax. *8
* National treatment will be given to foreign-invested enterprises and foreign employees; for foreign-invested enterprises to produce products not restricted by quota and permit, the proportion between the domestic sales and export will be determined and adjusted freely according to the market demand; the electric rate for foreign-invested enterprises is the same as that for domestically-invested enterprises; foreign employees to work and study in Shenzhen will enjoy services of the same standards in shopping, renting houses, seeking for medical care and sightseeing in Shenzhen.
Policies for reference:
1 Detailed Rules for Implementation of Income Tax Law for Foreign-Invested Enterprises and Foreign Enterprises of the People's Republic of China, 1991
2 Policies to Encourage the Development of Software Industry, Shenfu [2001] No. 11
3 Notification on Taxation Policies to Encourage the Development of Software Industry and Integrated Circuit Industry, Caisui <2000> No. 25
4 Regulations on Speeding Up the Development of Shenzhen's Integrated Circuit Manufacturing Industry, Shenfu [2001], No. 14
5 Decision on Improving Regional Innovation System and Boosting the Sustained and Fast Development of Hi-Tech Industries, Shenfu [2004] No. 1
6 Measures of Shenzhen to Provide Large-Sized Enterprises with Convenient Services, Shenfu [2003], No. 136
7 Venture Investment Rules for Shenzhen Special Economic Zone, (2003)
8 Regulations on Management of Non-Governmental Technological Enterprises of Shenzhen Special Economic Zone, (June 23, 1993, Order of the People's Government of Shenzhen, No. 10)
9 Provisional Regulations for Venture Capital Investment in Hi-Tech Industry, Shenzhen, (2000)
10 Franchised Operation Methods for Shenzhen's Public Utilities, (2003)
Regulations of Shenzhen to Encourage the Development of Technological Enterprise Incubators, Shenfu (2003), No. 63
Regulations of Shenzhen to Encourage Overseas Students to Start Business in Shenzhen, (2000)
Details for Implementation of Regulations of Shenzhen to Encourage the Development of Financial Industry, (Shenfu [2003], No. 175)
Methods of Shenzhen for Management of Subsidy for Patent Application, (Shencaiqi (2002) No. 3)
Suggestions of Shenzhen for Vigorous Development of Its Modern Commerce and Trade, 2002
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