China relaxes rules for technology enterprises
January 24, 2011 | BY
clpstaff &clp articles &The Chinese authorities have released a new circular that relaxes the recognition criteria for advanced technology service enterprises (ATSEs)
In late December, the State Administration of Taxation, the Ministry of Commerce, the Ministry of Science and Technology and the National Development and Reform Commission jointly issued Cai Shui [2010] No. 65, which replaces the previous tax policy for ATSEs, Circular 63.
Circular 65 relaxes the previous requirement that at least 70% of an ATSE's income should be generated from advanced technical services. This has now been reduced to 50%.
Also, the previous requirement for possessing international qualifications has been abolished.
Despite these changes, Circular 65 maintains some of the provisions from its predecessor including the fact that taxpayers can still benefit from a preferential corporate tax rate of 15%.
According to the circular, applications for ATSE recognition can now be approved by relevant authorities at the city level, rather than at both city and provincial levels as required by Circular 63.
*This story was authored by Jack Grocott and provided courtesy of International Tax Review.
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