Under the support of relevant national ministries and commissions, Zhongguancun National Independent Innovation Demonstration Zone (the Zone) has recently been officially approved to carry out the pilots of income tax preferential policies for venture capital enterprises and technology transfer in a bid to consolidate the long-term investment of venture capitals in tech start-ups.

According to Beijing Municipal Finance Bureau, the pilot income tax preferential policy for  venture capital enterprises will encourage long-term investment of venture capitals. Income tax on eligible venture capital enterprises in the Zone will be halved for transfer of equity held for above three years when it accounts for 50 percent of the total annual income from equity transfer, while income tax will be fully exempted for transfer of equity held for above five years when it accounts for 50 percent of the total annual income from equity transfer.

In terms of the pilot income tax preferential policy for technology transfer, eligible income from technology transfer will not be taxed for a maximal amount of CNY 20 million and will only be taxed in half for the amount above the exempted CNY 20 million, provided the enterprises are registered registered in Chaoyang Park, Haidian Park, Fengtai Park, Changping Park, Shunyi Park and Daxing—Yizhuang Park of Zhongguancun National Independent Innovation Demonstration Zone.

According to Beijing Municipal Finance Bureau, the preferential policy pilots will help improve the industrial structure and the ecosystem for scientific and technological innovation. Longer investment benefits more from the income tax policies, which will incent tech start-ups invested by VCs to grow bigger and stronger bigger and stronger.

(Note: Content source is from Xinhua)