High- and New-Technology Enterprises: Updated Preferences, Qualifications and Trade-Offs

June 02, 2008 | BY

clpstaff &clp articles

Earlier this year the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation issued a circular containing new Measures on HNTE Recognition. These measures, along with a Catalogue of supported industries, detail HNTE recognition requirements and necessary administration procedures under the PRC Enterprise Income Tax Law.

Income tax preferences and qualifications for High- and New-Technology Enterprises (HNTEs) have recently been clarified, filling a key gap in China's corporate tax regime, which unified its treatment of foreign and domestic enterprises from the beginning of the year under the PRC Enterprise Income Tax Law(中华人民共和国企业所得税法). Key changes for HNTEs include:

• higher required spending on domestic research and development of technology and intellectual property,

• the narrowing of preferences for foreign investment and geographical location,

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