Ministry of Finance and State Administration of Taxation, Circular on Tax Policies Relevant to Promoting the Development of Venture Capital Investment Enterprises

财政部、国家税务总局关于促进创业投资企业发展有关税收政策的通知

June 02, 2007 | BY

clpstaff &clp articles

Tax reduction for venture capital investment enterprises investing in unlisted technology SMEs.

Clp Reference: 3200/07.02.07 Promulgated: 2007-02-07 Effective: 2006-01-01

Issued: February 7 2007
Effective: January 1 2006

Main Contents: Where a venture capital investment enterprise has invested in an unlisted small- or medium-sized high and new technology enterprise (Technology SME) in the form of equity investment for two years or more, the taxable income of the venture capital investment enterprise may be offset by 70% of the investment amount in the Technology SME, provided that certain conditions, such as the following are satisfied:

(1) its business registration shall indicate it as a professional venture capital investment enterprise, such as a "venture capital investment limited liability company" or "venture capital investment company limited by shares";

(2) in regard to the Technology SME invested in by the venture capital investment enterprise, the number of employees shall not exceed 500, the annual sales turnover shall not exceed Rmb200 million, and the total amount of assets shall not exceed Rmb200 million; and

(3) at the time of application for the offset of taxable income, the funds used in high and new technology and the research and development of the products of the Technology SME shall account for 5% or more of the sales turnover of the SME, and the income from technology and from sales of high and new technology products shall account for 60% or more of the total income of the SME in the year in question.

Related Legislation: Tentative Measures for the Administration of Venture Capital Investment Enterprises, State Council, Issue of the Circular on the Implementation of the Auxiliary Policies of the , 2006; Requirements and Procedures for Recognition of High and New Technology Enterprises in State High and New Technology Industry Development Zones (Revised), Jul 23 2000, CLP 2000 No.8 p.8; Circular on Implementing Provisions Relevant to the Recognition of High and New Technology Enterprises Outside State High and New Technology Industry Development Zones, 2000; and Circular on Several Income Tax Questions Concerning Enterprise Equity Investments, Jun 21 2000, CLP 2000 No.7 p.15

clp reference:3200/07.02.07promulgated:2007-02-07effective:2006-01-01

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]