State Council, Circular on the Implementation of Transitional Preferential Tax Treatment for Hi-tech Enterprises Newly Established in Special Economic Zones and the Shanghai Pudong New Area

Issued: December 26 2007
Effective: January 1 2008

Main Contents: In the case of hi-tech enterprises that the state needs to support on a priority basis in the Shenzhen Special Economic Zone (SEZ), Zhuhai SEZ, Shantou SEZ, Xiamen SEZ, Hainan SEZ and Shanghai Pudong New Area that complete registration on or after January 1 2008, their income obtained from the aforementioned SEZs or the Shanghai Pudong New Area shall, from the tax year in which the enterprises obtain their first sum of income from production or business, be eligible for exemption of enterprise income tax in the first and second years, and 50% reduction in enterprise income tax according to the statutory tax rate of 25% from the third to fifth years.

“Hi-tech enterprises that the state needs to support on a priority basis” refers to hi-tech enterprises recognized in accordance with the Measures for the Administration of the Recognition of Hi-tech Enterprises that have their own core intellectual property and that fulfil the criteria stipulated in Article 93 of the Implementing Regulations for the PRC Enterprise Income Tax Law (Articles 1 and 2).