I. Policy Content

Resident enterprises registered in specific areas of the Zhongguancun Science Park will enjoy tax benefits on eligible technology transfer income—full exemption from corporate income tax (CIT) for amounts up to CNY 20 million in a tax year, and a 50-percent CIT reduction on any excess amounts.

II. Policy Innovations

The CIT exemption threshold for technology transfer income has been increased from CNY 5 million to CNY 20 million. Technology transfer income obtained by a resident enterprise from a related party in which the enterprise holds, directly or indirectly, a total of 100 percent equity interest, is eligible for the preferential policies

III. Policy Basis

Notice of the Ministry of Finance, State Taxation Administration, Ministry of Science and Technology, and China National Intellectual Property Administration on the Pilot Policies of Corporate Income Tax for Technology Transfers in Specific Areas of Zhongguancun Science Park (CS [2020] No. 61

IV. Scope of Application

The policies apply to resident enterprises registered in Chaoyang Park, Haidian Park, Fengtai Park, Shunyi Park, Daxing – Yizhuang Park, and Changping Park of Zhongguancun Science Park

V. Applicable Conditions

Eligible technologies cover patents (including national defense patents), computer software copyrights, exclusive rights in integrated circuit layout design, new plant variety rights, new biomedical varieties, and other technologies approved by the Ministry of Finance and the State Taxation Administration.

Specifically, a patent refers to the exclusive rights granted by law to holders for their inventions and creations, which include inventions, utility models, and designs. Technology transfer is defined as the act of a resident enterprise transferring ownership of an eligible technology, or granting a minimum three-year non-exclusive license, and a global exclusive license. Any technology transfer must be formalized by a technology transfer contract.

Management of related matters shall adhere to Article 3 of the Notice of the Ministry of Finance and the State Taxation Administration on Corporate Income Tax Policy Issues Related to Resident Enterprise Technology Transfers (CS [2010] No. 111). Technology transfer income obtained by a resident enterprise from a related party in which the enterprise holds, directly or indirectly, a total of 100 percent equity interest, is eligible for the preferential policies.

VI. Application Method

Enterprises may access preferential policies through self-assessment, application, and retention of relevant materials for future examination. They shall evaluate their own eligibility for the preferential policies based on their operational performance and applicable tax regulations. Eligible enterprises may independently calculate and claim the tax reduction and exemption amounts when filing the annual CIT returns and paying the taxes. Moreover, relevant materials must be collected and kept as required for future examination.

VII. Retention of Materials

Since technology transfer circumstances can differ, enterprises shall keep the following materials for future examination:

1. Proof of transferred technology property rights;

2. For domestic technology transfers:

(1) Technology transfer contract (duplicate);

(2) Technical contract registration certificate;

(3) Materials related to the aggregation, allocation, and calculation of technology transfer income;

(4) Proof of relevant tax and fee payments;

3. For international technology transfers:

(1) Technology export contract (duplicate);

(2) Technology export contract registration certificate or technology export license;

(3) Technology export contract data sheet;

(4) Materials related to the aggregation, allocation, and calculation of technology transfer income;

(5) Proof of relevant tax and fee payments

(6) Review opinions from relevant authorities according to the Catalogue of Technologies Prohibited or Restricted from Export in China issued by the Ministry of Commerce and the Ministry of Science and Technology;

4. Details of costs and expenses related to the transfer of technology ownership; the amortization expenses for intangible assets related to the transfer of use rights;

5. Other relevant materials.

VIII. Retention Duration

Materials must be kept until the conclusion of the CIT settlement period for that year.