China Clarifies Enterprise Income Tax incentive for Technology Transfers
Update from Nair & Co. International Tax Team
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China Clarifies Enterprise Income Tax incentive for Technology Transfers

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The Chinese State Administration of Taxation (SAT) recently issued clarification on the definition of income from transfer of technology by resident companies, reports Nair & Co.’s International Tax Team.

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China Clarifies Enterprise Income Tax incentive for Technology Transfers

  1. 1. China Clarifies Enterprise Income Tax incentive for Technology Transfers Update from Nair & Co. International Tax Team (Bristol, UK) - The Chinese State Administration of Taxation (SAT) recently issued clarification on the definition of income from transfer of technology by resident companies, reports Nair & Co.’s International Tax Team. Income from transfer of technology by a company in China is tax exempt up to CNY 5 million (Excess of CNY 5 million is taxed at 12.5%). The recent clarification provides that income from technical advice, technical service and technical training for the purposes of benefiting from the tax incentive is referred to as those technical advices, services and trainings that are necessary for conversion of the technology transferred into production and practical use, but subject to certain conditions (proper drafting of clauses in the transfer contract, payments for technical advice to include certain prescribed components, etc.). Further, SAT also announced that income related to after-sale, maintenance and upgrading of the technology transfer will not qualify for the incentive as such income is not related to technology transfer. Companies in China planning to undertake technology transfers and intending to make use of the concerned tax incentives may find the above clarification useful as it reduces ambiguity on the eligibility of certain transactions. For more information about doing business overseas or to know more about our International Expansion Services team please contact us. Subscribe to regular global tax compliance alerts from Nair & Co. Get the latest news releases and updates on international tax, HR, Finance, compliance and other legal news at Nair & Co. Industry Alerts. About Nair & Co. Nair & Co., the leader in international business expansion services, provides accounting, HR, legal, tax and compliance services for the set up and management of your international operations. Our model of a single-pointof-contact, supported by internal teams of experienced advisors, helps clients expand business and manage risk so they can focus on their core business and sustain growth with minimal risk, stress and cost. We support nearly 250 clients in over 70 countries. Nair & Co. is headquartered in Bristol, UK, has 450 employees and offices in China, India, Japan, Singapore, and the US. Learn more at www.nair-co.com Media Contacts: For media enquiries or to learn to more about Nair & Co., please email us at media@nair-co.com or call Yvonne Smith at +1.408.501.8867

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