August 2017
Circular on Tax Policies for Technology Company Incubators(Mainland China)
2016.08.11
James Cheng
On August 26, 2016, the Ministry of Finance and the State Administration of Taxation issued the Notice on Tax Policies for Technology Company Incubators (hereinafter, the "Circular"), which provides that industry incubators that meet applicable requirements (including makerspaces, hereinafter referred to as "Incubators") are eligible for preferential tax policies.
1. Criteria for Incubators
(1) The Incubators shall be listed in the List of National Technology Company Incubators released by the administrative agency for science and technology under the State Council.
(2) The Incubators are required to separately calculate business revenue generated from the lease of premises and houses to incubated enterprises and from providing incubation services.
(3) The area of premises provided by the Incubators for use by incubated enterprises (including pubic service areas) should account for over (including) 75% of area that the Incubators has independently control of, and the total number of incubated enterprises should account for over (including) 75% of the enterprises in the Incubators.
2. Conditions for Incubated Companies
The Circular also imposes the following conditions on the research and development premises, incubation time and the size of incubated companies helped by the Incubators:
(1) The company registration location and the main research and office areas must be located on the Incubator's incubation premises.
(2) The company must be a newly registered company, or one that has been established for less than two years before applying to enter an Incubator, and such company has not stayed in the Incubator for over 48 months.
(3) The company fits the standards for small and micro enterprises category pursuant to the Provisions on the Category Standards for Small and Medium-sized Enterprises.
(4) A single company occupied no greater than 1,000 square meters of the incubation premises upon its entrance; for an incubating company engaged in aviation, aerospace or other special fields, no more than 3,000 square meters.
(5) The products (services) of the company fall within the scope of the High and New Technology Domains Receiving Key Support from the State released by the Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation.
3. Duration of Preferential Tax Policies
The Circular sets different implementation durations for different types of taxes. If the above conditions are met, the Incubators' housing and land that are used by the Incubators themselves or provided to the incubating companies free of charge or for rent shall be exempt from January 1, 2016 through December 31, 2018. In addition, from January 1, 2016 through April 30, 2016, no business tax will be levied on revenue generated from the lease of premises and houses to incubated companies and from providing incubation services. Similarly, during the period of the pilot program for replacing business taxes with value-added taxes, no value-added taxes will be levied on revenue generated from the lease of premises and houses to incubated companies and from providing incubation services.
James Cheng
On August 26, 2016, the Ministry of Finance and the State Administration of Taxation issued the Notice on Tax Policies for Technology Company Incubators (hereinafter, the "Circular"), which provides that industry incubators that meet applicable requirements (including makerspaces, hereinafter referred to as "Incubators") are eligible for preferential tax policies.
1. Criteria for Incubators
(1) The Incubators shall be listed in the List of National Technology Company Incubators released by the administrative agency for science and technology under the State Council.
(2) The Incubators are required to separately calculate business revenue generated from the lease of premises and houses to incubated enterprises and from providing incubation services.
(3) The area of premises provided by the Incubators for use by incubated enterprises (including pubic service areas) should account for over (including) 75% of area that the Incubators has independently control of, and the total number of incubated enterprises should account for over (including) 75% of the enterprises in the Incubators.
2. Conditions for Incubated Companies
The Circular also imposes the following conditions on the research and development premises, incubation time and the size of incubated companies helped by the Incubators:
(1) The company registration location and the main research and office areas must be located on the Incubator's incubation premises.
(2) The company must be a newly registered company, or one that has been established for less than two years before applying to enter an Incubator, and such company has not stayed in the Incubator for over 48 months.
(3) The company fits the standards for small and micro enterprises category pursuant to the Provisions on the Category Standards for Small and Medium-sized Enterprises.
(4) A single company occupied no greater than 1,000 square meters of the incubation premises upon its entrance; for an incubating company engaged in aviation, aerospace or other special fields, no more than 3,000 square meters.
(5) The products (services) of the company fall within the scope of the High and New Technology Domains Receiving Key Support from the State released by the Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation.
3. Duration of Preferential Tax Policies
The Circular sets different implementation durations for different types of taxes. If the above conditions are met, the Incubators' housing and land that are used by the Incubators themselves or provided to the incubating companies free of charge or for rent shall be exempt from January 1, 2016 through December 31, 2018. In addition, from January 1, 2016 through April 30, 2016, no business tax will be levied on revenue generated from the lease of premises and houses to incubated companies and from providing incubation services. Similarly, during the period of the pilot program for replacing business taxes with value-added taxes, no value-added taxes will be levied on revenue generated from the lease of premises and houses to incubated companies and from providing incubation services.
