To encourage scientific research and technological development and promote scientific and technological progress, the policy of full Value-Added Tax (VAT) refund for domestically produced equipment purchased by domestic-funded research and development (R&D) institutions and foreign-funded R&D centers shall continue to be implemented. Relevant matters are hereby announced as follows:

Ⅰ. Domestic-funded R&D institutions and foreign-funded R&D centers eligible for the full VAT refund policy for purchasing domestically produced equipment include:

1. Institutions primarily engaged in scientific research and technological development that are transformed into enterprises or integrated into enterprises during the reform of the science and technology system, as reviewed and determined by the Ministry of Science and Technology in conjunction with the Ministry of Finance, the General Administration of Customs and the State Taxation Administration;

2. National engineering research centers reviewed and determined by the National Development and Reform Commission in conjunction with the Ministry of Finance, the General Administration of Customs and the State Taxation Administration;

3. Enterprise technology centers reviewed and determined by the National Development and Reform Commission in conjunction with the Ministry of Finance, the General Administration of Customs, the State Taxation Administration and the Ministry of Science and Technology;

4. National key laboratories (including enterprise national key laboratories) and national engineering technology research centers reviewed and determined by the Ministry of Science and Technology in conjunction with the Ministry of Finance, the General Administration of Customs and the State Taxation Administration;

5. Various scientific research institutes affiliated with ministries, commissions and institutions under the State Council that engage in scientific research, reviewed and determined by the Ministry of Science and Technology, as well as various scientific research institutes subordinate to governments of provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan that engaged in scientific research, reviewed and determined by the science and technology departments at their respective levels;

6. Science and technology-related private non-enterprise entities reviewed and determined by the Ministry of Science and Technology in conjunction with the Ministry of Civil Affairs, or by the science and technology departments of provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan, and the Xinjiang Production and Construction Corps in conjunction with the civil affairs departments at their respective levels;

7. National small and medium-sized enterprises (SMEs) public service demonstration platforms (technology-related) reviewed and determined by the Ministry of Industry and Information Technology in conjunction with the Ministry of Finance, the General Administration of Customs and the State Taxation Administration;

8. Institutions of higher education providing higher education at junior college level or above, whose academic certificates are recognized by the state (as listed on the official website of the Ministry of Education);

9. Foreign-funded R&D centers meeting the requirements specified in Article Ⅱ of this Announcement;

10. Other scientific research institutions, technology development institutions, and schools reviewed and determined by the Ministry of Finance in conjunction with relevant departments of the State Council.

Ⅱ. A foreign-funded R&D center shall meet all of the following conditions simultaneously:

1. R&D expenditure standards: As an independent legal entity, its total investment amount shall not be less than eight million US dollars; As a non-independent legal entity which is an internal department or a branch of a company, its total R&D investment shall not be less than eight million US dollars.

2. It shall have no fewer than 80 full-time research and experimental development personnel.

3. The original value of equipment purchased cumulatively since its establishment shall not be less than 20 million yuan.

The eligibility of a foreign-funded R&D center shall be reviewed and determined by the commerce department in conjunction with relevant departments based on the above conditions. The specific measures for review and determination are detailed in Annex 1.

Ⅲ. Domestic-funded R&D institutions and foreign-funded R&D centers that have been reviewed and determined but later commit serious tax-related violations or dishonest acts shall not be eligible for the tax refund policy. Specific administrative measures for tax refund shall be formulated separately by the State Taxation Administration in conjunction with the Ministry of Finance. The coordinating departments for the review and determination of relevant R&D institutions shall promptly notify in writing the tax departments at the same level of any newly established, changed, or revoked domestic-funded R&D institutions or foreign-funded R&D centers, specifying the start and end dates of their relevant eligibility.

Ⅳ. Definitions for the purposes of this Announcement:

1. The term “total investment” mentioned in this Announcement refers to the amount stated in documents such as “Foreign Investment Information Report Acknowledgement”, “Certificate of Approval for Establishment of Enterprises”, or “Establishment/Change Filing Record Acknowledgement” issued or provided by the commerce department.

2. The term “total R&D investment” mentioned in this Announcement refers to assets invested by a foreign-invested enterprise specifically for establishing and constructing the R&D center, including assets to be invested under signed purchase contracts (a list of assets already purchased and a list of contracts for assets to be purchased shall be submitted).

3. The term “annual R&D expenditure” mentioned in this Announcement refers to the average annual R&D expenditure over the last two fiscal years. For an R&D center with less than two full fiscal years, the actual R&D expenditure may be calculated based on any consecutive 12-month period since its establishment. Cash and physical asset contributions shall account for no less than 60%.

4. The term “full-time research and experimental development personnel” mentioned in this Announcement refers to personnel among the enterprise’s scientific and technological activity staff who are exclusively engaged in three categories of project activities, including basic research, applied research, and experimental development. This includes personnel directly participating in the aforementioned project activities, relevant full-time scientific and technological management personnel, and direct service personnel providing materials, literature, equipment supply, and equipment for the projects. Such personnel shall sign labor contracts of at least one year with the foreign-funded R&D center or the foreign-invested enterprise to which it belongs. The headcount shall be determined as of the day before the R&D center submits its application.

5. The term “equipment” mentioned in this Announcement refers to experimental apparatus, devices, and instruments that provide essential conditions for scientific research, teaching, and technological development. When calculating the cumulative original value of purchased equipment, the original value of both imported equipment and domestically produced equipment purchased shall be included. This includes equipment for which purchase contracts have been signed and delivery is scheduled within the current year (a list of purchase contracts and delivery deadlines shall be submitted). The aforementioned domestically produced equipment purchased shall fall under the types listed in the List of Equipment for Technology Development, Scientific Research, and Teaching attached to this Announcement (Annex 2). Disputes over the scope of domestically produced equipment shall be reported level-by-level by the tax authorities in charge to the State Taxation Administration for determination in consultation with the Ministry of Finance.

Ⅴ. This Announcement shall be effective until December 31, 2027. The specific effective date for a domestic-funded R&D institution or foreign-funded R&D center shall be the first day of the month following that in which it obtains tax refund eligibility.

It is hereby announced.

Annexes:

1.Measures for Review and Determination of Tax Refund Eligibility for Domestically Produced Equipment Purchased by Foreign-Funded R&D Centers.docx

2. List of Equipment for Technology Development, Scientific Research, and Teaching.docx

Ministry of Finance
Ministry of Commerce
State Taxation Administration
August 28, 2023

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.