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	CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE TAX PREFERENTIAL POLICY APPLICABLE TO ENTERPRISES WITH FOREIGN INVESTMENT WITH REGARD TO TECHNOLOGY-INTENSIVE AND KNOWLEDGE-INTENSIVE PROJECTS

	(No. [2003] 135 of the State Administration of Taxation promulgated on November 7, 2003 and has come into force as of January 1, 2003)


SUBJECT : CORPORATE TAXATION; PREFERENTIAL POLICY; FOREIGN INVESTMENT; TECHNOLOGY-INTENSIVE AND KNOWLEDGE-INTENSIVE PROJECTS
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 11/07/2003
IMPLEMENT DATE : 01/01/2003
LENGTH : 462 words
TEXT :

With a view to accurately applying the tax preferential policy of the state, certain issues relating to the application of the tax preferential policy specified in Article 73 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises (hereinafter referred to "Rules for the Implementation of the Income Tax Law") to enterprises with foreign investment with regard to technology-intensive and knowledge-intensive projects are hereby notified as follows:

1. For enjoying the tax preferential policy specified in Article 73 of the Rules for the Implementation of the Income Tax Law with regard to technology-intensive or knowledge-intensive projects, the leading products produced by an enterprise with foreign investment must be those listed in the China Catalogue of High and New Technological Products (promulgated in 2000) (hereinafter referred to "Catalogue of Products"), and the income from sales of such leading products for the year must be more than 50% of the total income from sales of all products of the enterprise for the same year. If an enterprise fails to reach the above-mentioned 50% for any year, such enterprise may not, for the same year, enjoy the tax preferential policy specified in Article 73 of the Rules for the Implementation of the Income Tax Law.

2. Enterprises approved to enjoy the tax preferential policy with regard to technology-intensive and knowledge-intensive projects shall annually submit a report on the percentage of the income from sales of the above-mentioned leading products to the local tax authorities for its verification and for archival purposes.

3. The tax authorities at different levels shall examine and submit to the authorities at the higher level the applications submitted by enterprises with foreign investment for enjoying the tax preferential treatment with regard to technology-intensive or knowledge-intensive projects, in strict accordance with the Circular of the State Administration of Taxation concerning the Tax Preferential Treatment Applicable to Enterprises with Foreign Investment with Regard to Technology-Intensive and Knowledge-Intensive Projects (No. [1995] 139 of the State Administration of Taxation). In the case of uncertainty as whether the products produced by the enterprise with foreign investment who submit the application are within the scope specified in the Catalogue of Products, the State Administration of Taxation shall request by letter the Torch High Technology Industrial Development Center under the Ministry of Science and Technology (hereinafter referred to "Torch Center") to make a review. The State Administration of Taxation shall send a copy of such letter to the submitting authorities, which shall immediately urge the relevant enterprise to contact the Torch Center (telephone: 010-68511568) and to provide the relevant materials as may be required by the Torch Center for review.

4. The present Circular shall come into force as of January 1, 2003.