CIT Reduction for Technology Advanced Enterprises in China

Qualified Field

To qualify, the enterprise must be engaged in the following services that are listed in the Technologically Advanced Service Business Recognition Scope (Trial):

• Information Technology Outsourcing Service
• Software Development and Outsourcing
• Information Technology R&D Service Outsourcing
• Information System Operation and Maintenance Outsourcing
• Technical Business Process Outsourcing Services
• Technical Knowledge Process Outsourcing Service

Prescribe Criteria

1. Enterprises must register in China (excluding Hong Kong, Macao, and Taiwan)
2. Enterprises must engage in one or more of the technologically advanced service businesses in the Technologically Advanced Service Business Recognition Scope (Trial) (Qualified Field)，and adopt advanced technology or possess strong R&D capabilities.
3. Employees with a college degree or above must account for more than 50% of the total number of employees in the company.
4. The income from the technologically advanced service business must account for more than 50% of the company’s total income for the year.
5. The income from the offshore service outsourcing business shall not be less than 35% of the company’s total income for the year.
6. The income obtained from offshore service outsourcing business refers to the income obtained by the enterprise or the subcontracted enterprise from the overseas unit through providing overseas units the contracted services that are listed in the qualified field.

Qualification Management

1. Qualified technologically advanced service enterprises should apply to the local provincial science and technology department. The provincial science and technology department in conjunction with the commerce, finance, taxation, development, and reform departments will jointly review and issue a document for confirmation. They will file the list of recognized enterprises and relevant conditions to The Ministry of Science and Technology’s “National Technically Advanced Service Enterprise Business Handling Management Platform” for the record. The Ministry of Science and Technology will share the filed information with the Ministry of Commerce, the Ministry of Finance, the State Administration of Taxation, and the National Development and Reform Commission. Qualified technologically advanced service enterprises must fill in their basic information in the “Service Trade Statistics Monitoring Management Information System (Service Outsourcing Information Management Application)” of the Ministry of Commerce and submit data on time.
2. The recognized technologically advanced service enterprises shall notice the local tax authority with relevant recognized documents regarding the preferential corporate income tax policies. If the conditions for technologically advanced service enterprises that qualified corporate income tax preferences to change, the enterprise shall report to the competent tax authority within 15 days from the date of the change. If the enterprise no longer qualified the tax preferences, they shall perform their tax obligations in accordance with the law. In the process of implementing preferential tax policies, if the competent tax authority finds that the enterprise does not have the qualifications of a technologically advanced service enterprise, the authority shall submit it to the accreditation agency for review. If it is confirmed that the enterprise does not meet the requirements, the enterprise shall be disqualified from the preferential tax policies.
3. The technologically advanced service enterprises in 31 service outsourcing demonstration cities in China that have already been recognized in 2017 will continue to be effective Starting from January 1, 2018, the certification management of technologically advanced service enterprises in China’s service outsourcing demonstration cities will be implemented in accordance with the management measures formulated by the provinces (autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the plan).

Material Needed for Qualification

1. General catalog
2. “Application Form for National Technically Advanced Service Enterprise Certification (Recheck)” (Signed by the legal person of the enterprise and affixed with the official seal of the enterprise)
3. Discussion on the development of technologically advanced service business by the enterprise (no less than 1,000 words)
4. Copies of the “Business License” and other relevant registration documents (with the official seal of the enterprise)
5. Audited last year’s financial accounting report (including accounting statements and notes for accounting statements)
6. Last year’s corporate income tax return (including the main table and the attached table)
7. A copy of the certificate of the enterprise’s workplace (the company’s house ownership certificate or house lease contract, and the company’s official seal)
8. A table of the number and names of employees in the enterprise for the previous year, (indicating the educational structure of the employees, the status of the personnel engaged in offshore service outsourcing), and a copy of the social insurance payment form for the employees.
9. Last year’s total income, technologically advanced service business income, offshore service outsourcing business income summary table; the company’s previous year’s sales/service contract, cooperative development contract, entrusted development agreement, and other materials; copies of the receipts of enterprise’s previous year’s technologically advanced service business income (accounting for more than 50% of the enterprise’s total revenue for the year); copies of bank settlement or foreign exchange income verification of the enterprise’s income from offshore service outsourcing business in the previous year (accounting for more than 35% of the company’s total revenue for the year)
10. Supporting material that proves the enterprise adopts advanced technology or research and development capabilities, such as copies of the enterprise award or product award (qualification) certificate, intellectual property certificate, customer evaluation certificate, and other materials.