Tech transfer tax breaks may fail to entice MNCs

December 18, 2015 | BY

Katherine Jo

The SAT has granted further tax breaks for technology transfers including non-exclusive licensing, but MNCs aren't likely to take the chance of disclosing their IP in China

China recently lowered the tax-exemption bar for technology transfers, widening the scope for eligibility and potentially allowing a far greater number of companies to apply for the break.

From 2016, all non-exclusive licensing agreements over 5 years with a transfer revenue below Rmb5 million are exempt from enterprise income tax. Those over Rmb5 million will be taxed at half the standard rate. But while this is a welcome development for businesses, it applies only to tax-resident enterprises.

There's a hook within the bait, and multinational companies (MNCs) may not bite.

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