Jiangsu Province Releases Preferential Tax Policies to Promote New Technologies and Products

Posted by Reading Time: 2 minutes

Sept. 11 – The Jiangsu Provincial Office of the State Administration of Taxation (SAT) released the “Announcement Regarding Preferential Tax Policies to Promote the Development of New Technologies and Products (suzhengfa [2012] No.96, hereinafter referred to as the ‘Announcement’)” on August 29. Key provisions of the Announcement can be found below.

    • Taxpayers providing technology transfer, technology development and related technology consultation and services shall be exempted from value-added tax (VAT) payment.
    • When VAT general taxpayers sell self-developed software (including animation software) upon which 17% VAT is levied, the portion of the actual tax burden over 3% can be immediately refunded upon collection.
    • Taxpayers providing taxable services to overseas institutions – such as technology transfer and technology consultation – shall be exempted from VAT payment.
    • Research, development and design services provided by taxpayers for new technologies and products to overseas institutions (excluding design services provided to domestic immovables) is entitled to zero VAT rate and may enjoy VAT exemption, offset and rebate or tax exemption policy according to the relevant provisions.
    • For enterprises registered in service outsourcing demonstration cities and engaged in offshore service outsourcing of new technologies and products, the taxable service they provide shall be exempted from VAT payment.
    • R&D and design related export business engaged in by integrated circuits design, software design and animation design enterprises, as well as other high- and new- tech enterprises engaged in are entitled to VAT exemption, offset and rebate policies according to relevant provisions.
    • Research and development institutions purchasing domestically-produced equipment to develop new technologies and products are entitled to full VAT refund.
    • Accredited high- and new- tech enterprises and advanced technology service enterprises can apply for pre-payment of corporate income tax at a reduced rate of 15 percent.
    • Corporate income tax shall be waived on the portion of income not exceeding RMB 5 million obtained by enterprise from technology transfer, and any excess portion shall be levied at half of the applicable rate.
    • Corporate income tax of key software production enterprises and integrated circuits design enterprises under National Planning shall be levied at a reduced rate of 10 percent, if they have not enjoyed tax exemption in the current year.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.

For further details or to contact the firm, please email china@dezshira.com, visit www.dezshira.com, or download the company brochure.

You can stay up to date with the latest business and investment trends across China by subscribing to The China Advantage, our complimentary update service featuring news, commentary, guides, and multimedia resources.