(“ANNOUNCEMENT”) (国家税务总局关于技术转让所得减免企业所得税有关问题的公告), ISSUED BY SAT

According to the PRC Enterprise Income Tax (“EIT”) Law, the amount a resident enterprise obtains from a technological transfer of up to RMB 5 million will be exempt from EIT and anything over that amount will be taxed at half rate.

The Announcement states that the technical consulting, technical service, and technical training income that can be considered technology transfer income for the purposes of the exemption. This is income from technical consultancy, technical services and technical training the transferor provides to the transferee, to master and apply the transferred technology. The income must also meet the following conditions:

  1. Technical consultancy, technical services and technical training must be connected with the technology transfer agreed in the technology transfer contract.
  2. Income from technical consultancy, technical services and technical training and from the technology transfer project must be received as a whole.

Application of this exemption is subject to approval from the authorities.

Date of issue: October 21, 2013. Effective date: November 1, 2013.