Industry Policies of the Shenzhen Special Economic Zone
1) General Industries
A. The rate of corporate income tax charged on foreign-invested
enterprises (FIEs, particularly Wholly Foreign Owned Enterprises) has decreased from the original 30% to the present
15%, while the local income tax levied at the rate of 3% is
exempted. *(Note 1)
B. China’s tax law provides that a foreign-invested
manufacturing enterprise is allowed two-year’s exemption
of corporate income tax starting from its incorporation, and
a tax credit valued at the half of corporate income tax in
the ensuring three years. After the tax allowance polices
expire, certified enterprises-for-export are allowed a reduced
rate of 10% of corporate income tax provided the volume of
exports accounts for 70% or above of the current production;
and advanced-technology-enterprises (editor’s note:
advanced-technology-enterprise denotes a business that offers
advanced technology, develops new products, achieves products
upgrade, increase exports, and decrease imports) are allowed
a three-year extension of a reduced corporate income tax rate
of 10%. *(Note 1)
C. The “land use fee” charged on certified enterprises-for-export may be reduced to half; and the “land use fee”
charged on certified advanced-technology-enterprises may be
reduced to half for five years. *(Note 1)
D. The foreign-invested enterprises engaged in the service
sector with an investment of over USD5 million and registered
operation duration of 10 years or above, from the year generating
profits onwards, may be allowed one-year exemption of corporate
income tax, and a tax credit of half of the corporate income
tax in the ensuring two years. *(Note 1)
E. Chinese-foreign equity joint ventures (EJVs)engaged in port and
dock construction with registered operation duration of 15
years or above, from the year generating profits, may be allowed
a five-year exemption of corporate income tax and a tax credit
of half of the corporate income tax in the ensuring five years.
*(Note 1)
2) Integrated Circuits Industry
A. A certified integrated circuits (IC) manufacturer, from
the date of its certification to the end of 2010, is subject
to a 17 percent value-added tax (VAT) charged on IC products
produced independently and sold by VAT general taxpayers and
the manufacturer whose effective VAT rate exceeds 6 percent
may claim a tax rebate equal to the exceeding part, once levied,
once refunded. The rebate, which is exempted from corporate
income tax, must be reserved for IC products’ research,
development and expansion purposes rather than taxable corporate
revenue. *(Note 4)
B. Accelerated depreciation can be applied to the production
equipment of IC manufacturers. The shortest depreciation term
of the production equipment of IC manufacturers can be three
years after being approved by tax authorities in case of domestically-invested
enterprises, and by the State Administration of Taxation in
case of joint-venture or exclusively foreign-invested enterprises.
*(Note 4)
C. For the preferential tax policies applied to the IC manufacturers
set up in Shenzhen, please refer to those applied to the foreign-invested
enterprises engaged in construction of ports, wharves, energy
and traffic projects with registered duration of 15 years
or above, in other words, these enterprises, from the year
generating profits, may be allowed a five-year exemption of
corporate income tax and a tax credit of half of the corporate
income tax in the ensuring five years upon enterprise application
and authorization by tax authorities. *(Note 4)
D. IC manufacturers may set aside 15% of current year’s
net sales as R&D costs. If the R&D costs prepared
are not used up in the current year, the balance may be carried
over to the next year and provision should be made for the
difference. If the investment of an enterprise in R&D
exceeds the amount of R&D costs prepared. The amount of
R&D costs less the provision may be recorded as incurred.
*(Note 4)
E. Production raw materials and consumables imported by and
exclusively used for IC manufacturers are exempt from tariffs
and import-related VAT. *?
F. Integrated circuit techniques, complete set of production
equipment, equipment and apparatuses specially for integrated
circuit imported by IC manufacturers are exempt from tariff
and import-related VAT, excluding the commodities listed in
the Catalog of Non-Tax-Free Imported Commodities for Foreign-Invested
Projects and the Catalog of Non-Tax-Free Imported Commodities
for Domestically-Invested Projects stipulated by the State
Council’s Guofa [1997] No. 37 Document. *(Note 4)
G. Regarding the IC manufacturers with an investment of over
RMB 8 billion or IC line width less than 0.25um, the preferential
taxation policies for those foreign-invested enterprises engaged
in energy and traffic prevail; the imported self-use raw materials
and consumables for production shall be exempt from tariffs
and import-related VAT. *(Note 4)
H. Integrated circuit techniques, complete set of production
equipment, equipment and apparatuses specially for integrated
circuit imported by certified IC manufacturers are exempt
from tariffs and import-related VAT, excluding the commodities
listed in the Catalog of Non-Tax-Free Imported Commodities
for Foreign-Invested Projects and the Catalog of Non-Tax-Free
Imported Commodities for Domestically-Invested Projects stipulated
by the State Council’s Guofa [1997] No. 37 Document.
*(Note 3)
I. Shenzhen Integrated Circuit Industrial Park is under planning
upon the first phase of construction of 3-5 square kilometers.
The certified IC manufacturers located within the Industrial
Park will be exempt from the assignment fee of the right to
the use of land, public utilities charges, and land development
charge.
J. If the senior domestic or foreign employees with professional
technology and management introduced by IC manufacturers purchase
residential houses in Shenzhen, the payment for the purchase
may be set off against their taxable gross income and the
method of refund after levy may be adopted. *(Note 4)
K. If the senior domestic or foreign employees with professional
technology and management and their families needed by IC
manufacturers settle in Shenzhen, they shall be free from
the restriction of the norm of domicileof Shenzhen and exempted
from city infrastructure expansion fee. *(Note 4)
L. Integrated circuit design enterprises are regarded as software
enterprises, favored by the relevant taxation policies for
the software enterprises. *(Note 3)
3) Software Industry
A. By 2010, a VAT general taxpayer is subject to a 17 percent
value-added tax (VAT) charged on software products developed
and sold by themselves and the taxpayer whose effective VAT
rate exceeds three percent may claim a tax rebate equal to
the exceeding part, once levied, once refunded. The rebate,
which is exempted from corporate income tax, must be reserved
for software products’ research, development and expansion
purposes rather than taxable corporate revenue. *(Note 2)
If the general taxpayers of VAT sell localized products of
imported software, the sales may be favored by the once-levied-once-refunded
policy according to the standards for self-developed software
products. *(Note 3)
B. Certified new software enterprises may enjoy 2 years of
corporate income tax exemption from the profit-making year
and half reduction for the next 3 years. Software enterprises
included in the country’s planning or key software enterprises
defined by provincial and municipal governments enjoy 5 years
of corporate income tax exemption and half reduction for the
ensuing 5 years. For the corporate income tax paid for the
third to fifth year which is levied at half reduced rate,
the municipal financial authority shall provide corresponding
allowance. *(Note 2)
C. The payment of salary and training expenditures of software
manufacturing enterprises can be deducted from the taxable
income according to the actual sum. *(Note 4)
D. If key software enterprises included in the country’s
planning did not enjoy tax incentives in the current year,
the corporate income tax shall be levied at the deducted rate
of 10%.*(Note 2)
E. The self-use equipment, technologies (including software),
accessories and parts imported together with the equipment
according to the contract that are imported by software enterprises
are exempt from tariff and import-related VAT, and this is
not applied to the commodities listed in the Catalog of Non-Tax-Free
Imported Commodities for Foreign-Invested Projects and the
Catalog of Non-Tax-Free Imported Commodities for Domestically-Invested
Projects. *(Note 2)
F. Software enterprises are encouraged to pass international
qualification certifications such as GB/T19000-ISO9000 certification
or CMM certification. The Municipal Foreign Trade Development
Fund supports those enterprises that have passed international
qualification certification over CMM-2. *(Note 2)
G. Shenzhen has established software enterprise hatching center.
The government shall provide subsidy to new software enterprises
entering the center from special fund for science and technology.
*(Note 2)
H. Software system analysts and system engineers engaged in
software work and software development personnel with university
education or above, or college education or above and semi-senior
professional titles or above or with important inventions
and creations, their spouses and minor children are allowed
to settle in Shenzhen (irrespective of transfer with spouse
or work transport) and exempted from city infrastructure expansion
fee.
I. For the software purchased by enterprises and institutions,
if the purchase cost attains the standard of fixed assets
or the software forms a part of intangible assets, the software
can be calculated according to fixed assets or intangible
assets. For domestically-invested enterprises, this shall
be reported to the tax authority for approval; for the foreign-invested
enterprises with a total investment of over USD$ 30 million,
this shall be reported to the State Administration of Taxation
for approval; for the foreign-invested enterprises with an
investment of less than USD$ 30 million, this shall be reported
to the tax authority for approval, and its depreciation or
amortization duration can be shortened as short as 2 years.
*(Note 3)
4) Logistics
A. For the logistic distribution centers and logistic enterprises
set up in the 6 major logistic parks of Shenzhen, the price
of land for their new constructions shall be charged at a
preferential rate of 20%; for the projects in Sungang Logistic
Park, the charge can be collected respectively at 50% of commercial
and warehousing counterparts, for the projects in the other
5 logistic parks, the charge can be collected respectively
at 25% and 75% of commercial and warehousing counterparts;
the land price for logistic distribution projects can be paid
in installment, with the maximum duration of 3 years. For
the electricity used for the large-sized refrigerated warehouses
and distribution centers of commercial, trade and circulation
enterprises, the charge can be collected as per the standards
for industrial electricity charging rate.
B. Enterprises for certified key logistic projects will enjoy
preferential policies in using land and electricity, and can
use “green channel” during project setup and construction
with fast approval process. *(Note 15)
5) Finance
A. Financial agencies with headquarters or regional headquarters
in Shenzhen can enjoy a one-time subsidy from the special-purpose
fund as per the standard of 1000 Yuan per square meter for
their new office buildings. *(Note 13)
B. Educational departments will give support to senior management
personnel of financial agencies in terms of their children’s
schooling, and municipal and district educational department
shall arrange for their children to study in key schools.
Upon approval by relevant departments, the children of foreigners
can enjoy the preference to study in Shenzhen’s international
schools or other schools. *(Note 13)
C. Sino-foreign joint venture or foreign banks established
in Shenzhen Economic Special Zone with a total investment
of over USD100 million and a duration of over 10 years may
enjoy 1 year of corporate income tax exemption from the profit-making
year and half reduction for the ensuing 2 years; their income
from financial business can enjoy 5 years of business tax
exemption from the opening day. *(Note 1)
6) Venture Investment
A. If venture investment agencies invest in the projects listed
in the Guide to Venture Capitals’ Investment in Hi-Tech
Industries, and the total investment exceeds its registered
capital or accounts for 70% of its total investment, and no
less than 30% is invested in startup enterprises, then the
venture investment agencies will enjoy the preferential policies
for hi-tech enterprises.
The accumulated investment specified in the previous clause
shall include the sum refunded and realized investment from
invested enterprises within 5 years on calculation; and the
investment by venture investment agencies shall be calculated
according to the actual invested sum. *(Note 7)
B. Venture investment agencies can draw risk compensation
fund as per 5% of the yearly gross income to compensate for
the investment losses of preceding years and the current year;
the balance of the risk compensation fund can be carried forward
to the next year, however, the total sum shall not exceed
10% of the net assets of the venture investment agencies in
the year. *(Note 7)
C. If venture investment agencies invest in Shenzhen’s
hi-tech industries and other technological innovation industries,
and the sum exceeds 70% of their investment, the agencies
can enjoy the relevant preferential policies of Shenzhen upon
approval by the technological authority of the Municipal Government.
*(Note 9)
D. From 2000 on, the municipal finance would prepare 10 million
Yuan, while the “Three funds for technologies”
would prepare 20 million Yuan every year to encourage overseas
students to start up their businesses in Shenzhen. First,
the special-purpose fund will be used to set up and improve
the Overseas Students Venture Park in the Hi-Tech Industrial
Park; second, the fund will be used for preferential discount
of loans for the hi-tech enterprises set up by the overseas
students. *(Note 12)
E. The following encouraging policies will be employed for
overseas students to undertake scientific research, investment
and establishment of all kinds of industries in Shenzhen:
those engaged in scientific research with research subjects
certified by the Municipal Technological Bureau as hi-tech
projects can obtain one-time scientific research startup subsidy
of RMB100-150 thousand Yuan; *(Note 12)
Authorities shall actively support those overseas students
engaged in go-between services such as evaluation, consultation
and advising, or third industries. Overseas students will
enjoy preferential policies for their investments in domains
except those forbidden by the country. *(Note 12)
In case of becoming a partner with patent or non-patent technological
results, the evaluation of technological result can account
for 25% of the registered capital, upon the certification
by the Municipal Technological Bureau, the evaluation of hi-tech
results can account for 35% of the registered capital. Other
forms can be undertaken if there are additional agreements
between the partners. *(Note 12)
F. Venture investments are encouraged to foster venture investment
market. Overseas and domestic investors are encouraged to
set up venture investment agencies in Shenzhen. If venture
investment agencies invest in the projects in compliance with
Shenzhen’s hi-tech industry direction, the accumulated
sum exceeds their registered capital or exceeds 70% of their
investment, and no less than 30% is invested in startup enterprises,
the agencies can enjoy the relevant preferential policies
of Shenzhen. For those hi-tech projects in compliance with
the government’s direction, especially those incubation
projects, the municipal technological development fund will
adopt multiple forms to inject matching investment to the
venture investment agencies. Warranty compensation fund and
re-warranty system will be set up to encourage the warranty
agencies set up by governmental and social capitals to give
more support to the technological innovations of medium and
small-sized technological enterprises. *(Note 5)
G. Expand the space of software and technology incubator through
“reconstruction of workshops and replacement of industries”.
The Municipal Government will arrange for special-purpose
funds, while district governments and relevant enterprises
will contribute at a proportion of no less than 1: 2 to reconstruct
the existing old workshops into software parks and technological
incubators. *(Note 5)
H. Support the development of incubators. A maximum of 3 million
Yuan will be subsidized to the technological enterprise incubators
certified by the technological authority of the Municipal
Government, so as to support the construction of public facilities
of the technological enterprise incubators such as public
service platform, network communications, and facilities and
instruments for professional labs. The Municipal Government
will invest to set up professional biological incubators.
*(Note 5)
I. The Municipal Government will arrange for a proportion
of the “Three funds of technology” to serve as
the special-purpose fund for construction of technological
enterprise incubators, and subsidize on a one-time basis those
certified technological enterprise incubators. The subsidy
for each technological enterprise incubator shall be 20% of
its total investment, and the maximum sum shall be RMB 3 million
Yuan. *(Note 11)
J. The certified technological enterprise incubators shall
be subsidized by the municipal finance from the day being
certified by referring to the supporting policies for hi-tech
enterprises. *(Note 11)
K. According to the actual conditions, accelerated depreciation
can be applied to the public service facilities of technological
enterprise incubators upon approval by the tax authority according
to related regulations, thus advancing the update and innovation
of technological enterprise incubators. *(Note 11)
L. In terms personnel transfer, graduates assignment, residence
registration and procedures for going abroad or to Hong Kong
and Macao, the enterprises to be incubated in the technological
enterprise incubators will enjoy the preferential policies
for the hi-tech enterprises of Shenzhen. *(Note 11)
7) Processing with Imported Material
A. Except the commodities listed in the Catalogue of Import
Commodities for Foreign-invested Projects Not Exempted from
Import Tariff, the unpriced equipment provided by foreign
investors for processing with imported material shall be exempted
from customs duty and import-related value added tax.
B. Except for the projects otherwise specified by the state,
the imported materials and parts for processing with imported
materials shall not be subject to quota permit management
in principle.
C. The materials and parts imported by enterprises of category
A for processing with imported materials shall be held by
the customs in bond and not subject to bank security deposit
account system. The materials and parts imported by enterprises
of category B for permitted processing with imported materials
shall be subject to "idling" bank security deposit
account system.
D. An enterprise engaged in processing with imported materials
that pay annual processing fees of over HKD 1 million may
apply for direct cargo transport between Shenzhen and Hong
Kong & Macao.
8) Public Utilities
The government encourages social funds and overseas capitals
to construct public utilities by means of solely-funded enterprises,
joint-venture enterprises, cooperation, and so on, and to
undertake franchised operations of public utilities. *(Note
10)
To further support and promote enterprises to develop in
Shenzhen, improve the city’s investment environment,
and enhance the drive for the city’s economic development,
we hereby work out the following measures to provide large-sized
enterprises with convenient and fast services:
1) The large-sized enterprises to enjoy the services shall
comply with one of the following conditions:
Enterprises registered and operated in Shenzhen with a sales
amount of over RMB3 billion yuan or export value of over USD200
million or amount of tax payment of over RMB200 million in
the previous year;
World top 500 enterprises investing in Shenzhen;
China top 100 electronic and information enterprises of 2003
and Guangdong’s 500 largest industrial enterprises of
2002 investing in Shenzhen;
Financial enterprises (including banking, insurance and securities)
headquartered in Shenzhen;
2) Service Items
The related functional departments of the Municipal Government
will set up a window to serve large-sized enterprises by providing
them with services concerning business application, consultation,
guidance, supervision, and complaint acceptance.
The functional departments shall appoint dedicated people
to coordinate the services to be provided to large-sized enterprises.
The Shenzhen Municipal Government shall appoint dedicated people to
coordinate the services to be provided to large-sized enterprises
spanning the functional departments of the government.
For the projects to be approved by the country, the Foreign
Economic and Trade Bureau and the Development Planning Bureau shall send dedicated people to the Ministry of Commerce and
the State Development and Reform Commission to coordinate
the enterprises to handle the related approval procedures.
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