Foreign-Invested R&D Centers Exempt from Import Taxes on Goods for Scientific Development

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Nov. 3 – In an effort to encourage more scientific research and development, the Chinese government has issued tax exemption incentives for foreign-invested research and development firms in China. From July 1, 2009 to December 31, 2010, qualifying foreign-invested R&D centers will be exempt from having to pay import taxes on goods for scientific and technological development.

The State Administration of Taxation, the Ministry of Finance and the General Administration of Customs laid out the new policies in the jointly released “Circular on Taxation Policies for R&D Institutions Purchasing Facilities.”

In order to qualify for the tax exemption, the circular specifies that foreign-invested R&D centers will have to have been established on or before September 30, 2009, have at least 90 full-time staff engaged in research and development, have accumulated purchase amounts of no less than RMb10 million, and have satisfied the stipulated criteria for R&D expensive.

For more information China’s tax regulations, please email Sabrina Zhang, the national tax partner for Dezan Shira & Associates, at tax@dezshira.com.