High-tech company rules shift focus to compliance

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Katherine Jo &clp articles

While the new regulations for high and new technology enterprises simplify status approval procedures and encourage R&D, they subject companies to closer monitoring and entail heavier compliance burdens

The high and new technology enterprise (HNTE) program is one of China's core innovation tax policies. Companies that qualify for HNTE status can enjoy a preferential 15% corporate income tax (CIT) rate rather than the standard 25%. The previous rules governing the HNTE status were issued in 2008 (2008 Measures), but rapid technological advancement in the last eight years has led to the industry being in dire need of an update.

On January 29 2016, the Ministry of Science and Technology, the Ministry of Finance, and the State Administration of Taxation jointly issued the Measures for the Administration of the Recognition of High and New Technology Enterprises (Revised) (New Measures), or Guokefahuo [2016] No.32. Some of the amendments have triggered heated discussions in China.

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