Notice On The Taxation Policies For Promoting The Development Of Startup Investment Enterprise issued on on 23 November 2007 and took effect on the same day
1. Who shall be eligible to apply for the preferential taxation policies?
Startup Investment enterprises which meet the requirements stipulated in the “Interim Measures on the Administration of Startup Investment Enterprises” and are approved by the Municipal Development and Reform Commission are eligible to apply for the preferential taxation policies under the “Notice on the State Administration of Taxation on the Taxation Policies for Promoting the Development of Startup Investment Enterprises”.
According to the Interim Measures, the term “startup investment enterprise” as mentioned refers to any enterprise organization registered and established within the territory of the People’s Republic of China for the purpose of mainly engaging in startup investment activities. The term “startup investment” as mentioned in the preceding sentence refers to any stock right investments that are injected into a startup enterprise in expectation of capital gains mainly by way of stock right transfer after the invested startup enterprise becomes mature or relatively mature. The term “startup enterprise” refers to any growing enterprise registered and established within the territory of the People’s Republic of China that is during the course of establishment or re-establishment, excluding those enterprises that have got listed in the open market.
The requirements for a Startup Investment Enterprises are as follows:
(1)It has been registered in the administrative department for industry and commerce;
(2)Its business scope conforms to the provisions of Article 12 of these Measures;
(3)The amount of its actual capital contributions is less than RMB 30 million yuan, or the amount of the down payment of its capital contributions is not less than RMB 10 million yuan, and all investors make a commitment to pay the balance of actual capital contributions in a sum of not less than RMB 30 million yuan within 5 years after the registration;
(4)The number of investors shall not exceed 200 persons. For a startup investment enterprise established in the form of a limited liability company, the number of investors shall not exceed 50 persons. The amount of investment made by a single investor into a startup investment enterprise shall not be less than 1 million yuan. All investors shall make investments in monetary form.
(5)It shall have at least 3 senior managers who have 2 or more years of startup investment experience or other relevant business experience to take charge of the investment management. If it entrusts another startup investment enterprise or startup investment management consulting enterprise as a management consulting institution to undertake its investment management responsibilities, this management consulting institution shall have at least 3 senior managers who have 2 or more years of startup investment experience or other relevant business experience to undertake the investment management responsibilities.
2. How to apply for preferential tax treatment?
Startup Investment enterprises intending to apply for preferential tax treatment shall file the required documents with the competent local taxation authorities and complete the “Application Form for Tax Credit and Exemption for Investments by Venture Capital Enterprises” and the “Form for the Basic Information about Small to Medium High-Tech Enterprises Invested in by Venture Capital Enterprises” within 2 months after the end of the taxation year.
Startup Investment enterprises applying for preferential tax treatment shall declare the allowable income tax deductions for the year only after the applications are approved by both the municipal finance bureau and taxation authorities.