Shanghai Creates Special Fund for the Headquarters of Multinational Companies

August 2, 2013 Posted by China Briefing Reading Time: 5 minutes

Aug. 2 – With the view to encourage multinational companies (MNCs) to set up regional headquarters in Shanghai, the local Municipal Finance Bureau and Municipal Commission of Commerce jointly released the “Measures on Management of the Special Fund Used for Encouraging the Development of Regional Headquarters of Multinational Companies (hushangwaizi [2013] No.283, hereinafter referred to as the ‘Measures’)” on April 12, which put forward the supporting standards and application materials of the special fund used for encouraging the development of regional headquarters in Shanghai (hereinafter referred to as the ‘Fund’). Detailed information can be found below.

Supporting Standards
According to the Measures, the Fund aims at encouraging and supporting MNCs to set up regional headquarters in Shanghai in the form of investment companies and management companies, as well as encouraging any existing Shanghai-based regional headquarters of MNCs to bring more substantive business to the city.

Subsidy Standards for Entity Establishment
For any regional headquarters that has been registered in (or has moved to) Shanghai in the form of an investment company after July 7, 2008, and has at least 10 employees, it shall be granted RMB5 million as an establishment subsidy. Such subsidies shall be disbursed over a three-year period at 40 percent, 30 percent and 30 percent, respectively, starting from the year after the regional headquarters registers in (or moves to) the city.

Subsidy Standards for Office Renting
For the regional headquarters of an MNC that has been registered in (or has moved to) Shanghai after July 7, 2008 and has at least 10 employees, if it leases the office for its own use, it shall be subsidized for a three-year period at 30 percent of the rent. However, the office should not be bigger than 1,000 square meters and the rental rate per square meter per day cannot be higher than RMB8.

Where such headquarters purchases or builds the office premises for its own use, it shall be granted a one-off subsidy that is equal to the total amount of the subsidy for renting the office for three years.

One-off Rewards to MNCs
A one-off reward at RMB10 million shall be given to a regional headquarters that satisfies the following requirements:

The entity is an investment company that is recognized as the national-level regional headquarters of an MNC after July 7, 2008 and generates over RMB1 billion in annual turnover for the first time since the year of its official recognition; and
The entity is an investment company that is recognized as the national-level regional headquarters of an MNC before July 7, 2008 and generates over RMB1 billion in annual turnover for the first time since 2008.

A one-off reward at RMB5 million shall be given to a regional headquarters that satisfies the following requirements:

The entity is a management company that is recognized as the regional headquarters of an MNC after July 7, 2008 and generates over RMB500 million in annual turnover for the first time since the year of its official recognition; and
The entity is a management company that is recognized as the regional headquarters of an MNC before July 7, 2008 and generates over RMB500 million annual turnover for the first time since 2008.

A one-off reward at RMB5 million shall also be given to a regional headquarters that satisfies the following requirements:

The entity is an investment company that is recognized as the regional headquarters of an MNC after January 1, 2012 and generates over RMB1 billion in annual turnover for the first time since the year of its official recognition;
The entity is an investment company that is recognized as the regional headquarters of an MNC before January 1, 2012 and generates over RMB1 billion in annual turnover for the first time since 2012.

Such rewards shall be disbursed over a three-year period at 40 percent, 30 percent and 30 percent, respectively.

Moreover, a subsidy of RMB8 million may be given to any Asia regional headquarters, Asia-Pacific regional headquarters, or larger regional headquarters recently established by an MNC in Shanghai after January 1, 2012. A subsidy of RMB3 million may be given to the existing Shanghai-based regional headquarters of an MNC which is subsequently upgraded to an Asia regional headquarters, Asia Pacific regional headquarters or larger regional headquarters.

Application Materials
The regional headquarters of an MNC that applies for the establishment subsidy shall submit the following materials to the competent local commerce department:

Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
Approval certificate and business license (photocopy);
Staff list and labor contract samples;
Letter of appointment for the person in charge of the regional headquarters issued by the parent company; and
Approvals issued by the Shanghai Municipal Commission of Commerce on recognizing the headquarters as a regional headquarters (photocopy).

The regional headquarters of an MNC that applies for the office renting subsidy shall submit the following materials to the competent local commerce department:

Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
Approval certificate and business license (photocopy);
Staff list and labor contract samples;
Letter of appointment for the person in charge of the regional headquarters issued by the parent company;
Approvals issued by the Shanghai Municipal Commission of Commerce on recognizing the headquarters as a regional headquarters (photocopy); and
Renting agreements of the self-use office, the property purchase contracts of the self-use office, or the property ownership certificates for a self-built office (photocopy).

The regional headquarters of an MNC that applies for the one-off reward shall submit the following materials to the competent local commerce department:

Application Form for the Special Fund of Shanghai Municipality Used for Encouraging the Development of Regional Headquarters of Multinational Companies (original copy);
Approval certificate and business license (photocopy);
Approvals issued by the competent commerce department on recognizing the applicant as a regional headquarters or a national-level regional headquarters (photocopy); and
The headquarter’s annual accounting statements and financial auditor’s reports (photocopy) of the year when the headquarters reaches the thresholds for enjoying rewards, and those of the preceding year.

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