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	NOTICE OF THE MINISTRY OF FINANCE AND STATE ADMINISTRATION OF TAXATION ON THE RELEVANT TAX POLICIES ON THE DEVELOPMENT OF STARTUP INVESTMENT ENTERPRISES

	(With the Intention of of supporting the development of startup investment enterprises by implementing the Notice on Printing and Distributing Several Supporting Policies for the National Outlines for Medium and Long-term Planning for Scientific and Technological Development (2006-2020) of the State Council (No. 6 [2006] of the State Council) as well as the Interim Measures for the Administration of Startup Investment Enterprises (Order No. 39 of the National Commission of Development and Reform and other 9 department), the following tax policies are now in effect)


SUBJECT : TAXATION; STARTUP INVESTMENT ENTERPRISES
ISSUING DEPARTMENT : MINISTRY OF FINANCE AND STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 02/07/2007
IMPLEMENT DATE : 01/01/2006
LENGTH :
TEXT :

1. Where a startup investment enterprise has invested in any small or medium unlisted new and high-tech enterprise by way of equity investment for 2 or more years, if it meets the following conditions, 70% of the amount of investment in the small or medium unlisted new and high-tech enterprise may be deducted from the taxable amount of startup investment enterprise:
(1)Its business scope conforms to the provisions of the Measures and it has registered in the industry and commerce administrative department as a professional startup investment company such as ¡°Startup Investment Limited Liability Company¡± or ¡°Startup Investment Joint Stock Limited Company¡±. If it has completed the industrial and commercial registration prior to the promulgation of the Measures on November 15, 2005, it may maintain its original name registered in the industry and commerce administrative department, but it shall make its business scope conform to the provisions of the Measures.

(2)It has finished the archival filing formalities according to the conditions and procedures as prescribed in these Measures and upon verification by the relevant administrative department, its investment conforms to the relevant provisions of the Measures;

(3)The total number of employees of its invested small or medium new and high-tech enterprises shall be no more than 500 employees, the annual sales revenue shall be no more than 200 million yuan, and the total amount of assets shall be no more than 200 million yuan.

(4)When the startup investment enterprise applies for deducting the investment from the taxable amount of income, the fund utilized for the research and development of new and high technologies and products by its invested small or medium new and high-tech enterprise during the current year shall account for 5% or more of the sales revenue of this enterprise, and the aggregate of the technological revenue and the revenue from sale of new and high-tech products shall account for 60% or more of the total revenue of this enterprise.

The measures for the recognition and administration of new and high tech enterprises shall be implemented in accordance with the Notice of the Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation on Printing and Distributing the Catalog of New and High-tech Products of China 2006 (No. 370 [2006] of the Ministry of Science and Technology), Conditions and Measures for the Recognition and Determination of New and High-tech Enterprises in the National New and High-tech Industrial Development Zones (No. 324 [2000] of the Ministry of Science and Technology), Notice about the Implementation Provisions on the Recognition of New and High-tech Enterprises outside National New and High-tech Industrial Development Zones (No. 120 [2000] of the Ministry of Science and Technology).

2. If the to-be-deducted taxable amount of income, which a startup investment enterprise calculates under provisions of Article 1 of this Notice, conforms to the tax credit conditions but exceeds the limit of tax credit of the current year, the excess portion may be gradually offset in the subsequent tax years.

3. Other matters relating to the income tax on equity investments made by startup investment enterprises shall be handled in accordance with the Notice of the State Administration of Taxation on Several Issues Concerning Equity Investments Made by Enterprises (No. 118 [2000] of the State Administration of Taxation).

4. Where a startup investment enterprise applies for deducting from the taxable amount of income its investment, it shall submit the following materials to the local competent tax organ:

(1)The certification materials relating to the investments made by the startup investment enterprise as verified by the relevant administrative department in which it has gone through the archival filing formalities;

(2)A photocopy of the contract on the investment to the new and high-tech enterprise, capital verification certificate for the investment actually made, and other relevant materials; and

(3)The basic information of the new and high-tech enterprises, as well as photocopies of the new and high-tech enterprise recognition certificate and the new and high-tech project certificate issued by the provincial science and technology department.

5. After the local competent tax organ gathers and examines the application materials of startup investment enterprises and given its opinions, it shall submit them to the superior competent organ according to the different level of the administrative department in which the archival filing formalities are completed:

(1)Those subject to the archival filing formalities in the relevant administrative department of the province (deputy provincial city) where the startup investment enterprise is located shall be submitted to tax department of the province, autonomous region, or municipality directly under the Central Government, and shall be jointly examined by the provincial finance and tax departments; or

(2)Those subject to the archival formalities in the relevant administrative department of the State Council under the Measures shall be submitted to the State Administration of Taxation, and shall be jointly examined by the Ministry of Finance and the State Administration of Taxation.

6. The Ministry of Finance and the State Administration of Taxation shall, jointly with the relevant departments, examine the name list of the startup investment enterprises which have gone through the archival filing formalities in the relevant administrative department of the State Council and which are announced to enjoy the preferential tax treatments. The finance and tax departments of a province, autonomous region, or municipality directly under the Central Government shall, jointly with the relevant departments, examine the name list of the startup investment enterprises which have gone through the archival formalities in the relevant provincial administrative department and which are announced to enjoy the preferential tax treatments, and shall submit the said name list to the Ministry of Finance and the State Administration of Taxation for archival purposes.

7. This Notice shall come into force as of January 1, 2006. The finance and tax administrative departments at all levels shall timely check the relevant materials submitted by the startup investment enterprises, carefully and properly implement the preferential tax policies.