Policy Topics on "Two Zones" (I)

Preferential Tax Policy for Enterprise

Technology Transfer Income

Preferential benefits for enterprises
A resident enterprise may enjoy relevant preferential tax policy on its income from technology transfers from affiliated parties of which it directly or indirectly holds a sum of 100% shares,
Within a tax year,

enterprise income tax exemptions shall be allowed for that part of income of not more than CNY 20 million ;

That part of income above CNY 20 million shall be taxed with a reduction of 50%.

Conditions required for eligible enterprises
Qualified technology transfer from January 1, 2020
6 branch parks (Chaoyang Park, Haidian Park, Fengtai Park, Shunyi Park, Daxing-Yizhuang Park, and Changping Park of the Zhongguancun National Innovation Demonstration Zone)
  • Transfer of the ownership of technology. Technology refers to patents (including national defense patents), computer software copyright, exclusive rights for integrated circuits layout-designs, new plant variety rights, new varieties of biological medicine, and other technologies as determined by the Ministry of Finance and the State Taxation Administration. Among them, patents are exclusive rights for invention and creation held by the obligee in accordance with law, including inventions, utility models, and design.
  • Transfer of non-exclusive licenses for a period of more than 3 years (including 3 years).
  • Transfer of global exclusive licenses.
Example
An enterprise registered in the Haidian Park of Zhongguancun National Innovation Demonstration Zone received an income of CNY 50 million in 2020 from technology transfer that is eligible for preferential tax policies. The amount of income to be preferentially taxed shall be CNY 35 million (CNY 20 million + CNY 30 million/2, where CNY 20 million to be exempted in full while CNY 30 million to be taxed by half). The aforementioned enterprise's tax exemption would break down as such: CNY 35,000,000 x 25% (enterprise income tax rate) = CNY 8,750,000.
How to apply
An enterprise shall identify its own eligibility and apply for preferential policies while keeping relevant materials in file for future inspection. An enterprise shall, according to its operation and relevant tax provisions, determine on its own whether or not it meets the stipulated conditions for preferential policies. Eligible enterprises may calculate the amount of tax to be exempted on their own at the time of pre-payment declaration, and fill out a tax return of enterprise income tax for preferential benefits.
For specific requirements, please refer to the Notice of the Ministry of Finance, State Taxation Administration, Ministry of Science and Technology, and China National Intellectual Property Administration on Policies Pertaining to Pilot Projects of Corporate Income Tax for Transfer of Technology in Specially Designated Industries in Zhongguancun Science Park (Cai Shui [2020] 61)
Lists of materials on record for future inspection
  • 1
    Certificate of property rights for transferred technologies
  • 2
    For domestic technology transfer:
    • Technology transfer contract (duplicate)
    • Certificate of technology contract registration
    • Relevant materials of collection, allocation and calculation of income from technology transfer
    • Concrete proof of relevant tax payments
  • 3
    For overseas technology transfer:
    • Technology export contract (duplicate)
    • Technology export contract registration certificate or technology export license
    • Technology export contract data sheet
    • Relevant materials of collection, allocation and calculation of income from technology transfer
    • Concrete proof of relevant tax payments
    • Examination results issued by relevant departments in accordance with the Catalogue of Technologies Prohibited or Restricted from Export by China issued by the Ministry of Commerce and the Ministry of Science and Technology
  • 4
    Details of related costs and expenses in the event of technology ownership transfer;Details of related amortization of expenses related to intangible assets in the event of license transfer;
  • 5
    Details of equity associations between the transferor and the transferee in the same year of technology transfer.