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Enquiry: Are Enterprises Deriving Income from the Transfer of the Right to Use a Technology Entitled to Any Preferential Income Tax Policy?

Photo: Technology Transfer
Photo: Technology Transfer

According to the Enterprise Income Law of the People’s Republic of China and its implementing rules as well as the Circular on Promoting Nationwide the Pilot Tax Policies for National Independent Innovation Demonstration Zones jointly issued by the Ministry of Finance and State Administration of Taxation, the income derived by enterprises across the country from the transfer of a non-exclusive licence of the right to use a technology for over five years is deemed technology transfer income and is entitled to enterprise income tax concession starting from 1 October 2015. For the first Rmb 5 million of technology transfer income derived by an enterprise in respect of a tax year, enterprise income tax is exempted; and for the part exceeding Rmb 5 million, enterprise income tax is reduced by half.

The technologies involved include patent (including national defence patent), computer software copyright, integrated circuit layout design exclusive right, new plant variety right, new types of biomedicine, as well as other technologies specified by the Ministry of Finance and State Administration of Taxation. Of which, patent refers to the exclusive right granted by law to inventions, utility models and designs of non-simple alterations to product patterns and shapes.

Content provided by Picture: HKTDC Research