Shanghai further encourages foreign investment in high-tech sector

In late 2000, in a bid to further encourage foreign investment in its high tech sector, the Shanghai government amended the "Several Rules concerning the Transformation of the Results of New and High Technologies" which where promulgated in 1998. The amendments include:

• foreign-invested enterprises in Shanghai which are identified as technology-intensive or knowledge-intensive enterprises will be subject to 15 per cent enterprise income tax;

• imports of equipment and related technologies and accessories that are needed by foreign-invested research and development centers but cannot be manufactured domestically are free from customs tax and import-related value-added tax;

• technology transfers by foreign-invested enterprises, foreign-invested research and development centers established by foreign investors, foreign enterprises and foreign individuals may, upon presentation of the certificate of registration of technology transfer contract, and subject to approval of tax office, be free from business tax. In addition, such enterprises and research and development centers are encouraged to employ foreign professionals;

• investment companies or investment management companies are allowed to apply their total capital to invest in the high-tech sector. An investment company whose investment in the high-tech sector exceeds 70 per cent of its total investment may, by reference to high and new technology enterprises, be entitled to local incentives granted by the government;

• using high and new high-tech results as capital contribution may amount to 35 per cent of a company's required total registered capital.

For further information please contact Catherine Guo at [email protected] or on +852 2846 9163.