Determination of High and New Tech Enterprise

Author: Zhong Yi, Michael Ni; [Shanghai Runhe Law Firm]

According to the “Administrative Measures for Determination of High and New Tech Enterprises”, the following conditions shall be simultaneously satisfied for an enterprise to be determined as a high and new tech enterprise:

(1)  The enterprise was registered within the territory of China and has independent intellectual property of the core technologies in its main products (services) by means of independent research and development, acceptance of transfer, donation or merger during the recent three years or by means of exclusive licensing for five years or longer;
(2)  The products (services) are within the scope as prescribed in the High and New Tech Fields under the Key Support of the State;
(3)  at least 30 % of the staff are scientific and technical personnel with an educational background of junior college or higher, of whom the research and development personnel account for at least 10 % of the staff;
(4)  continuous research and development and the proportion between its total research and development expenses during the recent 3 accounting years and its total sales revenue meets requirements as follows:
(a)  lower than 6% if the sales revenue during the latest year is less than 50 million yuan;
(b)  lower than 4% if the sales revenue during the latest year is 50-200 million yuan;
(c)   lower than 3% if the sales revenue during the latest year is more than 200 million yuan;
(d)  If the proportion between the total research and development expenditure incurred within China and the total research and development expenditure is less than 60% and 3 years have not lapsed since the registration of the enterprise, the calculation shall be based on the actual number of years of business operation of the enterprise.

(5)  The enterprise’s revenue resulting from high and new tech products (services) accounts for at least 60% of its total revenue during the current year; and

(6)  Other requirements.

Application Flow:

Materials to be submitted:

(1)    Submission of the application materials as follows:
(a) An application for determination of high and new tech enterprise
(b) The duplicate of the enterprise’s business license and tax registration certificate (photocopies);
(c) The intellectual property right certificate and other relevant certification materials;
(d) Descriptions about the number and education backgrounds of the employees, as well as the proportion between the research and development personnel and the total number of employees of the enterprise;
(e) The form of enterprise’s research and development expenditure during the recent three accounting year, which shall be accompanied by the materials prescribing the research and development activities;
(f) The financial statements during the recent three accounting years as well as the form of technical income.

The Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation shall be responsible for guiding, administering and supervising the determination of high and new tech enterprises throughout the country. The enterprise passed the determination of "High and New Tech Enterprise" can enjoy relevant encouraging and preferential policies of taxes.

Note: the above materials are edited by G·IPRs in April of 2009, which are only for your reference; detailed regulations shall refer to effective laws, regulations and policies when applying.