Measures for the Administration of the Recognition of High and New Technology Enterprises

高新技术企业认定管理办法 (中文)

Guokefahuo [2016] No.32 — Jointly issued by the Ministry of Science and Technology, the Ministry of Finance, and the State Taxation Administration on January 29, 2016. Effective from January 1, 2016.

Sources:

• Chinese text: 科技部 (Ministry of Science and Technology)

All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.

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Chapter I — General Provisions

Article 1

These Measures are formulated in accordance with the Enterprise Income Tax Law (hereinafter "EIT Law") and its Implementation Regulations for the purpose of supporting and encouraging the development of high and new technology enterprises (HNTEs).

Article 2

High and new technology enterprises as referred to in these Measures are resident enterprises that are registered in China (excluding Hong Kong, Macao, and Taiwan), that continuously engage in R&D and the transformation of technological achievements within the scope of the Catalogue of Key State-Supported High and New Technology Sectors, that have formed core independent intellectual property rights, and that conduct business operations on that basis.

Article 3

The HNTE recognition administration shall follow the principles of highlighting the enterprise as the main entity, encouraging technological innovation, implementing dynamic management, and upholding fairness and impartiality.

Article 4

Enterprises recognized as HNTEs in accordance with these Measures may apply to enjoy tax preference policies in accordance with the EIT Law, its Implementation Regulations, the Tax Collection and Administration Law, and other relevant provisions.

Article 5

The Ministry of Science and Technology (MOST), the Ministry of Finance (MOF), and the State Taxation Administration (STA) are responsible for the guidance, management, and supervision of the national HNTE recognition work.

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Chapter II — Organization and Implementation

Article 6

MOST, MOF, and STA shall form the National HNTE Recognition Administration Leading Group (hereinafter "Leading Group"), with the following main responsibilities:

1. Determining the direction of national HNTE recognition administration work and reviewing work reports;
2. Coordinating and resolving major issues in recognition administration and policy implementation;
3. Adjudicating major disputes in recognition administration matters, and supervising and inspecting local recognition work.

Article 7

The Leading Group shall have an Office composed of relevant personnel from MOST, MOF, and STA, with the office located at MOST. Its main responsibilities include:

1. Submitting HNTE recognition work reports and proposing policy improvement suggestions;
2. Guiding local recognition work, organizing supervisory inspections, and proposing rectification suggestions;
3. Managing the filing of local recognition results, publishing the list of recognized HNTEs, and issuing HNTE certificate numbers;
4. Building and managing the "HNTE Recognition Administration Network" (高新技术企业认定管理工作网);
5. Completing other tasks assigned by the Leading Group.

Article 8

The science and technology administrative departments of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan, together with their finance and tax departments at the same level, shall form the local HNTE Recognition Body (hereinafter "Recognition Body"). Each Recognition Body shall establish an office composed of personnel from the provincial-level science and technology, finance, and tax departments. Its main responsibilities include:

1. Carrying out HNTE recognition within the administrative region and submitting annual work reports;
2. Filing recognized HNTEs with the Leading Group Office and issuing HNTE certificates upon successful filing;
3. Selecting review experts (including technical and financial experts) and strengthening supervision;
4. Supervising and inspecting recognized enterprises, handling review applications and reports;
5. Completing other tasks assigned by the Leading Group Office.

Article 9

The HNTE qualification shall be valid for three years from the date the certificate is issued.

Article 10

After obtaining HNTE qualification, the enterprise may enjoy the tax preference starting from the year in which the certificate is issued, and shall complete the relevant tax preference procedures with the competent tax authority.

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Chapter III — Recognition Conditions and Procedures

Article 11

To be recognized as an HNTE, an enterprise must simultaneously satisfy all of the following conditions:

(1) The enterprise must have been registered for at least one year at the time of application;

(2) The enterprise has obtained ownership of intellectual property rights that play a core supporting role in its main products (services), through independent R&D, acquisition, donation, merger, or other means;

(3) The technology that plays a core supporting role in the enterprise's main products (services) falls within the scope of the Catalogue of Key State-Supported High and New Technology Sectors;

(4) The proportion of science and technology personnel engaged in R&D and related technological innovation to the enterprise's total workforce for the year is not less than 10%;

(5) The ratio of total R&D expenses to total sales revenue for the most recent three fiscal years (or the actual operating period if less than three years) meets the following requirements:

1. Enterprises with most recent annual sales revenue below RMB 50 million (inclusive): not less than 5%;
2. Enterprises with most recent annual sales revenue between RMB 50 million and RMB 200 million (inclusive): not less than 4%;
3. Enterprises with most recent annual sales revenue above RMB 200 million: not less than 3%.

Of the total R&D expenses, the portion incurred within China shall be not less than 60% of total R&D expenses;

(6) The proportion of revenue from high-tech products (services) to total revenue for the most recent year is not less than 60%;

(7) The enterprise's innovation capability assessment must meet the required standards;

(8) The enterprise has not experienced any major safety or quality incidents, or serious environmental violations, within the year prior to the application.

Article 12

The HNTE recognition procedure is as follows:

(1) Enterprise Application — The enterprise shall self-evaluate against these Measures. If it believes it meets the conditions, it shall register on the "HNTE Recognition Administration Network" and submit the following materials:

1. HNTE Recognition Application Form;
2. Certificates of lawful establishment;
3. Intellectual property materials, R&D project approval documents, technology transformation and R&D management materials;
4. Key technology indicators of high-tech products (services), production approvals, certifications, and quality inspection reports;
5. Materials on the enterprise's workforce and science and technology personnel;
6. Special audit or verification reports on R&D expenses for the most recent three fiscal years and high-tech product (service) revenue for the most recent year, issued by a qualified intermediary, together with R&D activity descriptions;
7. Financial statements for the most recent three fiscal years (including notes and financial condition report), verified by a qualified intermediary;
8. Annual EIT returns for the most recent three fiscal years.

(2) Expert Review — The Recognition Body shall randomly select expert panels from qualified experts. The expert panel shall review the materials and provide review opinions.

(3) Review and Recognition — The Recognition Body shall conduct a comprehensive review based on expert opinions, form a recognition decision, and report to the Leading Group Office. Recognized enterprises shall be publicized on the Network for 10 working days. If no objection is raised, the filing shall proceed and HNTE certificates shall be issued.

Article 13

After obtaining HNTE qualification, the enterprise shall submit an annual development report (covering IP, S&T personnel, R&D expenses, and operating revenue) on the Network before the end of May each year.

Article 14

For enterprises involving state secrets, the recognition shall be conducted in accordance with national confidentiality regulations while ensuring information security.

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Chapter IV — Supervision and Administration

Article 15

MOST, MOF, and STA shall establish a random inspection and key inspection mechanism to strengthen supervision. Recognition Bodies with identified issues shall be required to rectify; serious cases may result in suspension of recognition authority.

Article 16

Where a recognized HNTE is found to no longer meet the recognition conditions, the Recognition Body shall revoke its qualification and notify the tax authority to recover the tax preferences enjoyed from the year the conditions ceased to be met.

Article 17

Where an HNTE undergoes a name change or material change related to recognition conditions (such as division, merger, reorganization, or business change), it shall report to the Recognition Body within three months. If the enterprise still meets the conditions after review, its qualification remains unchanged (with a new certificate issued for name changes); otherwise, the qualification is revoked from the year of the change.

Article 18

Where an HNTE relocates entirely across Recognition Body jurisdictions within the validity period, its qualification remains valid. Where it partially relocates, the destination Recognition Body shall conduct a new recognition.

Article 19

A recognized HNTE's qualification shall be revoked if any of the following occurs:

1. Serious fraud in the application process;
2. A major safety or quality incident, or serious environmental violation;
3. Failure to report material changes on time, or failure to submit annual development reports for two consecutive years.

The Recognition Body shall notify the tax authority to recover tax preferences enjoyed from the year in which the above conduct occurred.

Article 20

All entities and personnel participating in HNTE recognition work shall bear obligations of integrity, compliance, and confidentiality.

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Chapter V — Supplementary Provisions

Article 21

MOST, MOF, and STA shall separately formulate the HNTE Recognition Administration Working Guidelines based on these Measures.

Article 22

These Measures shall be interpreted by MOST, MOF, and STA.

Article 23

These Measures shall take effect from January 1, 2016. The former Measures for the Administration of the Recognition of High and New Technology Enterprises (Guokefahuo [2008] No.172) is simultaneously repealed.

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Ministry of Science and Technology / Ministry of Finance / State Taxation Administration

January 29, 2016