Special Topics on Advanced Technology Service Enterprises

Opinions on Further Utilization of Foreign Investments
Guofa¡²2009¡³No.9

On April 6, 2010, In order to improve the quality and standards of foreign investment utilization as well as to further promote the positive effect of utilization of foreign fund in science and technology innovation, industry upgrading and regional coordinated development, etc, The State Council has given the following opinions:

Core Content:

  • Optimize the utilization structure of foreign investments

    1)Encourage to give priority to the supply of land to investment projects of for domestic and foreign enterprises of land-intensive-use counries, the price can be executed by not less than 70% of the corresponding ¡°The Minimum Price of National Industrial Land¡± upon determining the lowest price of land transfer.
    2)Encourage multinational corporation to establish their funcational institutions in China, such as regional headquarter, R&D centre, procurement center, financial management center, settlement center and audit centre of cost and profit,etc. Before December 31, 2010, R&D products which necessary to be imported by Foreign investment R&D centre who are in conformity with the regulations were exempted from import tariffs, value-added tax and consumption tax.
    3)Encourage Foreign enterprises to invest in service outsourcing industry,introduce advanced technology and management expertise and to enhance our international competitiveness of our service outsourcing industry.
  • Deepen Reform of Foreign Investment Administrative System

    Encouraged and permitted projects with a total investment of less than US$30 million (including added investment) in Guidance of Foreign Investment Industry, shall be approved by relevant authorities of the State Council, besides, they should also again approval from relevant authorities of the local government.
    Adjust the contents for approval, simplify the approved procedures, minimize the approval and approved area and to increase the transparency of approval. Deal with approval items concerning foreign investment in all aspects, and shorten the time for approval.
  • Create a Pleasant Investment Environment

    Standardize and promote the development of Development Zone, give full play to the effects of Development zone in system innovation, technology guide, industry concentration and land consolidation; Further improve the foreign exchange management of foreign-invested enterprises, simplify the payment procedures of foreign exchange capital of foreign-invested enterprises; enhance the promotion of investment, Strengthen investment introduction and recommendation to key countries, regions and industries, and to widely publicize our national policy of utilizing foreign investments.

Notice on Administrative Measures for the Identification of Shenzhen Advanced Technology Service Enterprises
Shenkegongmaoxinfuwuzi¡²2009¡³No. 26

On December 18, 2009, in order to make a good performance on taking administrative measures for the identification of Shenzhen advanced techonology service enterprises, Shenzhen Branch Trade and Industry has prepared this lesgislation, the contents are as follows:

Core Content:

  • Generally, the identification of Advanced Technology Service Enterprises are often collectively declared and approved twice a year, and the specific declaration time is April and September of each year. Identification of accepted enterprises will be completed within 60 working days after the deadline.
  • Conditions and documents that need to be met and submitted for the identification of advanced technology service enterprises

     1)Enterprise Registration Form (enterprise can log in¡¸the identification and management website for advanced technology service enterprises¡¹and fill in and upload by internet and then print out).
    2)Advanced Technology Service Enterprises Declaration Form (enterprises can log in¡¸the identification and management website for advanced technology service enterprises¡¹and fill in and upload by internet then print out).
    3)One piece of a paper on enterprises conducting advanced service business (including basic information about services provided by enterprises and their operational management, application of advanced technology and conduct R&D activity, prospect and planning of business development, industrial status and competitive strength of enterprises, major clients and their evaluation on the value-added services of enterprises).
    4)A copy of business license and tax registration certificate of the enterprise (with official seal affixed and original inspection).
    5)One piece of financial statement and special financial audit report of last year audited by accounting firm (enterprises who have been founded for less than 1 year are exempted from submitting audited financial statement of last year), , enclosed is foreign exchange earning certificate such as bank settlement or foreign exchange revenue verification, meanwhile, enclosed is supporting documents with related qualifications as audit report institution required.
  • Certification process£ºApply-audit-public notification-file-issue
  • Tax incentives after enterprise accreditation.
  • Advanced technology service enterprises will be re-audited every three years since the accreditation date. Re-audit application should be put forward in 3 months before 3 years expiration of accreditation period.

Implementation time of the law is from January, 1, 2009 to December, 31, 2013.

Notice on Tax Policy Issues of Advanced Technology Service Enterprises

Caishui(2009) No. 63

In order to further promote the development of advanced technology service, strengthen the innovation of technology and upgrade the ability of technical service and to improve comprehensive competitiveness of our service, approved by the State Council, notice on tax policy of advanced technology service enterprises is as follows:

Core Content:

  • Content of The Policy

    Tax pilot policy of advanced technology service enterprises of Suzhou Industrial Park should be extended to 20 Chinese service outsourcing demonstration cities such as Beijing, Shanghai, Chongqing, Shenzhen, Guangzhou, Suzhou, etc. The above 20 service outsourcing demonstration cities shall adopt the following policies from January 1, 2009 to December 31,2013:
    1.Advanced technology service enterprises after accreditation will be taxed at reduced rate of 15% for corporate income tax.
    2.The employee education expenses of Advanced technology service enterprises after accreditation will be permitted to settle and deduct in later tax year according to a rate of not more than 8% of its total wages.
    3.Offshore service outsourcing business revenue of advanced technology service enterprises shall be exempted from sale tax.
  • Business Scope of Advanced Technology Service Enterprises

    1.ITO: it include software R&D and outsourcing, information technology R&D service outsourcing and information system operation maintenance outsourcing, etc.
    2.BPO: it include business process design services, the internal management service, corporate operation service and corporate supply chain services.
    3.KPO.
    For detailed application scope of the above ITO, BPO and KPO ,please refer to the attachment.
  • Identification and Management of Advanced Technology Services Enterprises

    1.To clearly define the conditions for identification of advanced technical service enterprises.
    2.To specifically regulate the approved management procedures of the advanced technical service enterprises.

Reply on Enhancing The Development of Service Outsourcing Industry

Guobanhan(2009) NO. 9

On 5 May 2009 , General Office of the State Council approved policies and measures of promoting the development of service outsourcing industry that promogated by the Ministry of Commerce together with relevant ministries. Pilot cities are approved to implement a series of measures to encourage and support the development of China's service outsourcing industry.

Core contents£º

  • Eligible service outsourcing enterprises of advanced technology who hire an employee of a college or above education to be engaged in service outsourcing area and sign a labor contract for more than a year, would receive from the central government a maximum of RMB 4,500 yuan for training support. As for the eligible training professionals of the training institutions in the service outsourcing business (college education or above) , through the service outsourcing expertise and skills assessment, and servicing in outsourcing enterprises with labor contract lasting for more than one year ,the central government would spend no more than 500 yuan per person on training support in training institutions.
  • The central government offered the necessary financial support to the following aspects: public service platform equipment purchase and operating costs in service outsourcing model of urban and brand creation, intellectual property protection, participation in various related exhibitions inside and outside, international promotion ,the international quality accreditation and so on. According to the rules, service outsourcing infrastructure project of loans in National Economic and Technological Development Zone in the western region, could enjoy the central financial discount policy.
  • The government and enterprises are encouraged to outsource business ,not involved in secrets, such as data processing, to professional business by means of purchasing services. Credit products and insurance should be made, consistent with the characteristics and needs of service outsourcing business. Approval has also agreed to set up international service outsourcing talent pool and long-term mechanism for online recruitment, establish service outsourcing research and industry organizations.

Notice on The Implementation of Peculiar Labor Time System by Service Outsourcing Enterprises

Renshebufa(2009) NO 36

On 4 June 2009, in order to actively undertake international service outsourcing business and promote the development of China's service outsourcing industry, notice on implementation of peculiar labor time system by service outsourcing enterprises are set out below according to the requirements of "reply on a issue of the State Council in the promotion of service outsourcing industry ¡°guobanhan[2009]No.9¡±:

Core contents£º

  • In 20 model cities of service outsourcing , such as Shenzhen and Guangzhou , eligible service outsourcing enterprises of advanced technology , which could not conduct standard working hours system due to production features, can be approved by the local provincial Human Resources and Social Protection (labor and social security) departments, to implement a special working hours working system. Approval can also be implemented for software designers who can not be measured according to standard working hours as well as employees who may demand mobile operations.
  • Service outsourcing enterprises implementing special working hours system should establish specific implementation plans as per the laws and arrange employees¡¯ work hours and rest hours scientifically. Concentrative work, concentrative rest, rotate leave, compensatory leave, flexible working and other proper ways should be adopted to ensure employees¡¯ right to rest and leisure.
  • Provincial Ministry of Human Resources Social Security (Labor Security) where Service outsourcing enterprises is located should improve approval methods and procedures with special working hours system so as to increase approval efficiency.

A number of opinions on Financial support for the development

Yinfa(2009) NO 284

On 10 September 2009, the following opinions are set out herein to better implement the spirit of "Some opinions of State Council to promote economic development of the current financial"(guobanfa[2008] No.126)" and "The Reply on State Council General Office to promote the service outsourcing industry"(guobanfa[2009] No.9,to increase support towards financial transfer and industrial upgrading as well as to focus on Financial support for the development of outsourcing service industry of 20 demonstration cities.

Core contents:

  • Upgrade the development of outsourcing service industry supported by banking in all round. Proactively develop Innovative credit products that fit for the demand of outsourcing service industry . Develop financing innovative products that based on the industrial chain such as receivable accounts as security for loans, order loans and etc. The research promotion include business of intangible assets, such as proprietary technological knowledge, permitted patents and copyright.
  • Explore direct financing of outsourcing service industry in Multi-channel. Support qualified service outsourcing enterprises to be listing in and abroad. Proactively support outsourcing service industry by various bond financing products and means.
  • Improve Insurance products whose innovations are adaptable to the demand of outsourcing service industry. Improve insurance policy for export credit. Innovate different types of insurance products.
  • To improve foreign exchange management, facilitate foreign exchange balance of outsourcing service enterprises. Reduce exchange rate risk of outsourcing service enterprises and encourage outsourcing service enterprises to adopt RMB-denominated calculation system during the process of developing offshore outsourcing business.

Regulation on Information Protection for Domestic Enterprises to Undertake Service Outsourcing Business.

Decree of Ministry of Commerce of PRC
Decree of Ministry of Industry and Information Technology of PRC No.,13 2009

On 22 October 2009, in order to properly protect confidential information by domestic enterprises who have undertaken service outsourcing business(herein refered to as ¡°Vendor¡±), so as to maintain fair competition environment and promote the development of our service outsourcing industry, the following regulations are prepared according to the "PRC Contract Law" and other laws and administrative regulations.

Core contents:

  • Vendors and their shareholders, directors, supervisors, managers and employees shall not violate the regulations of service outsourcing contract, nor disclosure, use, or permit others to use their confidential information.
  • Vendors should establish Information Protection Agency or designate professional staff to be responsible for formulating information protection regulations and take reasonable, specific and effective security measures.
  • Vendors ensure the security of information by signing with the staff , especially staff relative to the confidentiality, the confidentiality agreements and competition-- prohibiting agreements ,as well as to sign confidentiality agreements with the third-party relative to confidentiality.
  • Vendors should strengthen the information security team training to enhance staff¡¯s awareness of confidentiality and avoid the occurrence of leaking confidential information.
  • Vendors are encouraged to actively learn information security certification requirements and best practice of the industry from home and abroad, to formulate internal information security management system and obtain domestic and international information security certifications.
  • If vendors violate confidentiality agreement that signed with the outsourcers, or violate the confidentiality regulations of the outsourcing service contracts, outsourcers can sue to the court of the jurisdiction according to the regulations in a confidentiality agreement or outsourcing service contract.
  • Vendors and outsourcers clarified the ownership of intellectual property or technological achievements generated in the process of providing services, and fulfilling obligations of confidentiality information by the vendors.
  • Vendors should not infringe the trademark right, patents, copyright and other intellectual property rights possessed by outsourcers.

The regulation will be effective from 1, February 2010.

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