ANNOUNCEMENT 28 Apr 2017

April 28th, 2017 - The Chinese government announced a change in tax policy for domestic investors.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

PRC Ministry of Finance, April 28th, 2017. (财税〔2017〕38号 关于创业投资企业和天使投资个人有关税收试点政策的通知)
http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201705/t20170502_2591730.html

Inception date: 01 Jan 2017 | Removal date: 31 Dec 2018
Still in force

Tax or social insurance relief

On April 28th, 2017, the Chinese Ministry of Finance introduced a policy whereby venture capitalists/angel investors in several pilot areas would be able to offset 70% of the investment amount against the taxable income of the invested enterprises.

The areas in question are: Beijing, Tianjin, Hebei, Shanghai, Guangdong, Anhui, Sichuan, Wuhan, Xi’an, Shenyang and Suzhou Industrial Park.

The investment amount must be held for two years; the investor must be Chinese and the firm must also be Chinese-controlled, as well as being a 'technology startup'.

It should be noted that the conditions for being such a firm are separate from the 'technology-based SMEs' classification. The requirements are, however, similar, with the key stipulations being (at the time of investment):

  • Fewer than 200 employees;
  • 30% with (at least) bachelor's degrees;
  • Established for fewer than five years;
  • R&D expenses accounting for at least 20% of total.

The measure came into force retroactively from January 1st, 2017 for corporate income tax deductions, and from July 1st for individual income tax. The measures also apply to relevant investments made in the two year period leading up to this announcement.

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AFFECTED PRODUCTS

 
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