Cai Shui [2020] No. 63

Beijing Municipal Finance Bureau, Beijing Municipal Tax Service of State Taxation Administration, Beijing Local Financial Supervision and Administration, and Beijing Regulatory Bureau of China Securities Regulatory Commission:

In accordance with the guiding principles of the official replies by the State Council, preferential policies regarding corporate income tax for corporate venture capital enterprises are thereby piloted in Zhongguancun National Innovation Demonstration Zone in Beijing (hereinafter referred to as the Zone). The notice on relevant policies is hereby announced as follows:

1. For eligible corporate venture capital enterprises in the Zone, corporate income tax shall be subject to a deduction by half, based on equity percentage of natural person shareholders by the end of the year, for income from the transfer of equities being held for above 3 years, provided that this part accounts for more than 50 percent of the annual income from equity transfers; corporate income tax shall be exempted, based on equity percentage of natural person shareholders by the end of the year, for income from the transfer of equities being held for above 3 years, provided that this part accounts for more than 50 percent of the annual income from equity transfers.

In the two aforementioned cases, the following formulas shall apply respectively to calculate the corporate income tax exemptions for the taxable year:

A. Income from the transfer of equities being held for above 3 years accounts for more than 50 percent of the annual income from equity transfers:

Corporate income tax exemptions = year-end equity percentage of natural person shareholders × annual corporate income tax payable ÷ 2

B. Income from the transfer of equities being held for more than 5 years accounts for more than 50 percent of the annual income from equity transfers:

Corporate income tax exemptions = year-end equity percentage of natural person shareholders × annual corporate income tax payable

2. Eligible corporate venture capital enterprises referred to in this notice must meet any and all of the following conditions:

A. Resident enterprises registered in the Zone and subject to a tax levy based on audit.

B. Subject to provisions contained in the Interim Measures for the Administration of Venture Capital Enterprises (Decree No. 39) jointly issued by 10 ministries including NDRC, or the Interim Measures for the Supervision and Administration of Private Investment Funds (Decree No.105) issued by CSRC, filed for record as per relevant rules and being operated in compliance with the provisions.

3. Natural person shareholders shall pay personal income tax in accordance with legal provisions for dividends from corporate venture capital enterprises.

4. This notice is hereby to be implemented as of January 1, 2020. For equity investment made before January 1, 2020, preferential tax policy stipulated in this notice shall apply to income from equity transfer completed during the term of validity and eligible for the provisions specified in Article 1 of this noteice.

Ministry of Finance of the People's Republic of China

State Taxation Administration of the People's Republic of China

National Development and Reform Commission of the People's Republic of China

China Securities Regulatory Commission

December 20, 2020