(“Cai Guan Shui [2014] No. 2”) (关于调整重大技术装备进 口税收政策的通知), jointly issued by SAT, MOF, Ministry of Industry and Information Technology, General Administration of Customs, National Development and Reform Commission, and Department of Energy

Cai Guan Shui [2014] No. 2 reviews the tax policies applicable to qualifying entities importing certain key components and raw materials (“KCRMs”) for the production of key technological and equipment machinery (“KTEMs”). Revised versions of the catalogs of KCRMs and KTEMs are also published. Also a catalog of non-tax exempt imported KTEM is newly published.

The tax policies, effective since March 1, 2014, mainly consist of non-subjection to customs duties and VAT for the import of goods listed in the 2014 KCRMs catalog used to manufacture products listed in the 2014 KTEM Catalog. On the contrary, the importation of self-used equipment listed in the non-tax exempt catalog, as well as the related technology, accessories and spare  parts,  is subject to import VAT and customs duties even when carried out by enterprises that are eligible for preferential tax policies under the Circular of the State Council on Adjusting the Tax Policy of Imported Equipments (“Guofa [1997] No. 37”).

The requirements to qualify for these tax policies are the following:

  • To have independent legal person status;
  • To have a sound capacity for design, research and development, and manufacturing;
  • To have a team of specialized technicians; and
  • To own core technology and independent intellectual property rights

To benefit from these tax policies, the applicants must complete the application procedure and annually comply with reporting obligations.

Date of issue: February 18, 2014. Date of effectiveness: March 1, 2014.