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China government offers a range of R&D incentives and benefits for those companies with different types of enterprise statuses and many of them can be enjoyed jointly. In certain technology development contracts can also enjoy turnover tax (VAT) exemption. Specifically:


R&D Enterprise Status:

  • National and local governments cash grants

  • 150% or 175% eligible R&D expenses can be deducted for Corporate Income Tax (CIT) purpose

  • Local Individual Income Tax (IIT) rebate for management and technical personnel.


Software Enterprise Status:

  • 2-year exemption followed by 3-year of half-reduction on CIT

  • Preferential CIT rate of 10% for key software enterprises

  • Software products enjoy preferential VAT rate of 3%

  • Local IIT tax rebate for technical personnel and related management


Integrated Circuit (IC) Enterprise Status:

  • Preferential CIT rate of 15%

  • 2-year exemption followed by 3-year of half-reduction on CIT 

  • Or 5-year exemption followed by 5-year of half-reduction on CIT

  • Preferential CIT rate of 10% for key IC design enterprises

  • Local IIT tax rebate for technical personnel and related management


High-Teck Enterprise Status:

  • Preferential CIT rate of 15%

  • Local governments cash grants


Technology Development Contract:

  • Turnover tax (VAT) exemption 


OPING’s Innovation Team is focused on changes and legislation trend of law and regulations of China R&D government incentives to guide the enterprises how to reasonably deal with the new challenges and identify the new opportunities brought by the changes of law and regulation, to help the enterprises reasonably and legally utilize R&D government incentives policy in order to maximize the benefit of the enterprises. Take enterprises’ operational characteristic into consideration, from the perspective of guiding the enterprises to achieve comprehensive R&D management, propose feasible comments and suggestions about how to optimize enterprises’ internal R&D management.

Most importantly, we don’t get paid until you receive the government incentives.

Achieving innovation-led development is a guiding principle in China’s 13th Five-Year-Plan (2016-2020). In guidelines released in May, China has gone so far as to specify a range of targets including becoming an ‘innovative nation’ by 2020, an ‘international leader of innovation’ by 2030, and ‘a world powerhouse of science and technology’ by 2049.


Overall expenditure on research and development (R&D) has grown from just 0.9 per cent of Gross Domestic Product (GDP) in 2000, to 2.1 per cent in 2014. China is on track to reach its 2020 target of spending 2.5 per cent of GDP on R&D, though Beijing and Shanghai as well as Jiangsu Province in China’s east have already surpassed this target. The 13th Five-Year-Plan Guidelines set a national average target of 2.8 per cent by 2030.


Made in China 2025 and the Internet Plus initiatives aim to move China's manufacturing sector up the value chain by developing or adopting more innovative technology solutions and systems.


There are 146 high-tech parks administered by China’s national government, and thousands more established by provincial and municipal governments. Each offers a suite of favourable taxation policies and other support mechanisms.


China boasts some 2,300 makerspaces and 2,500 incubators and accelerators. This includes over 460 in Shanghai (of which 200+ are publicly funded), all seeking to attract and support China’s new wave of young entrepreneurs, hoping to be the next Alibaba, Baidu or Tencent. This pool of talent is huge: 3.9 million students graduated from Chinese universities in 2014, of which 40 per cent were in science and engineering disciplines.


The investment environment is also staggering in scale. According to Zero2IPO, 780 Chinese government-backed VC funds raised a total of A$305 billion in 2015, almost five times that raised by VC firms outside China in the same period.


China is an increasingly important market for startups and exporters of innovative technologies.



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