Under Caishui [2015] No. 116, 4 when a resident enterprise obtains income from nonexclusive licensing of technology for a period exceeding five years, the enterprise will be entitled to an EIT exemption of up to RMB 5 million and a 50% reduction on the excess amount.

Through Announcement [2015] No. 82, the SAT clarifies key issues on the application of this policy:

  1. Qualified technology includes patents, computer software copyrights, proprietary rights of integrated circuit layout designs, new plant variety rights, new biomedicines and any other technology specified by the MOFCOM and the SAT.
  2. Only the owners of the qualified technology can benefit from EIT preferential treatment, and the competent authorities must confirm ownership.
  3. Income will be calculated based on the following formula: Income = licensing fees – amortization of intangible assets – relevant taxes and charges – allocated period expenses 

Date of issue: November 16, 2015. Effective date: October 1, 2015