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Online CBA: What Requirements Do Software Enterprises in China Have to Satisfy to Enjoy Preferential Income Tax Exemption and Deduction?

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Q: What Requirements Do Software Enterprises in China Have to Satisfy to Enjoy Preferential Income Tax Exemption and Deduction?

A: For software enterprises in China to enjoy a reduced enterprise income tax rate of 15%, they must satisfy the following requirements:

1. They must obtain a software enterprise recognition certificate.

2. Their core business must be software development and production, system integration, application service and other related technical services; enterprises purely engaged in software trading are not entitled to the concession.

3. They must own at least one software product developed by themselves or possess the intellectual property right of at least one software product, or provide such services as integrated information system which have passed qualification certification.

4. They must have the necessary technical equipment and business venue required for software development.

5. The number of their technical staff engaged in software product development and technical services may not be less than 50% of the total number of staff.

6. Their research and development expenses on software technology and products should account for over 8% of their software income.

7. Their annual software sales revenue should account for over 35% of their total annual income. Of which, the income from self-developed software should account for over 50% of total software sales revenue.

(The HKTDC provides one-on-one China Business Advisory Service free of charge to assist companies in resolving problems encountered when doing business in China. For enquiries and appointments, please call (852) 1830 668 or register online.)

Content provided by Picture: HKTDC Research