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Provisions of Shanghai Municipality on Promoting the Conversion of Advanced New Technological Achievements Into Productivity
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| (Promulgated on May 31, 1998; Revised on June 9,1999) In order to implement the Law of the People' s Republic of China on Promoting the Conversion of Advanced New Technological Achievements into Productivity and the Circular of the State Council Office on Transmitting the Provisions of the Science and Technology Ministry and other departments for Promoting the Conversion of Advanced New Technological Achievements into Productivity (State Council Office Transmission No. 1999-29 )and carry out the strategy of "rejuvenating the city by science and education" , these Provisions are specially revised. 1. This Municipality shall establish an accrediting system for projects converting advanced new technological achievements into productivity and a special organ to assess the technological grades, market prospects, risks and intellectual property of both foreign-invested and home-invested projects in Shanghai converting advanced new technological achievements into productivity. The Municipal Government shall publish a catalog of advanced new technological industries and technologies in Shanghai. Any legal person or natural person may, in accordance with the catalog published by the Municipal Government, apply for the accreditation of projects converting advanced new technological achievements into productivity. The accredited projects converting advanced new technological achievements into productivity shall enjoy preferential treatment provided for by these Provisions. Newly developed projects by foreign-invested enterprises registered in Shanghai converting advanced new technological achievements into productivity with autonomous intellectual property may also enjoy preferential treatment provided for by these Provisions upon accreditation. 2. The municipal and district/county governments shall set up a special fund to pay interest discounts on loans and provide guarantees for financing accredited projects converting advanced new technological achievements into productivity. The Municipal Government shall allocate RMB600 million to set up an investment fund for starting businesses and invest in risk ventures, giving priority to accredited projects converting advanced new technological achievements into productivity. Accredited projects converting advanced new technological achievements into productivity shall hold priority in the list of the municipal technical innovation projects and enjoy special support in capital investment and discount on loan interest. 3. The Municipal Government shall set up a Shanghai service center for converting advanced new technological achievements into productivity. The said center providing "one-door type" service, shall be responsible for organizing the accreditation of projects converting advanced new technological achievements into productivity and for organizing relevant departments for the approval, industrial and commercial registration, taxation registration, and preferential policy implementation of such projects. The said center shall also be responsible for cultivating and guiding intermediary service organizations engaged in the conversion of scientific and technological achievements into productivity, collecting and publishing information about the tackling of scientific and technological problems in the application fields, popularizing scientific and technological achievements made both at home and abroad, establishing channels for the communication between the circles of science and technology and those of industry and finance, and conducting information exchanges between the industries, universities and research institutions. The Municipal Government shall set up a trading market of technological property, promote the stock investment and the property right trade of high-tech enterprises, and give an impetus to the conversion of advanced new technological achievements into productivity and their industrialization. 4. The government shall refund the land use fees and the rents for leasing land within 3 years upon the accreditation of a project converting advanced new technological achievements into productivity. The transaction fees for purchasing housing for production and business and the property rights registration fees shall also be exempted. Part of the house title deed tax may be returned as government allowance. And such projects shall be exempted from the fees for augmenting the volume of running water, drainage, gas and power supply in the process of construction. When the holder of an accredited project converting advanced new technological achievements into productivity starts a business, the registered capital may come in installments and the relevant fees collected by the administrative organs in the process of organizing the corporation shall be exempted (unless otherwise stipulated by the State). 5. The sales tax and corporate income tax of a project converting advanced new technological achievements into productivity as well as that part of value-added tax which goes to the local treasury shall be listed in revenues and expenditures and refunded in accordance with the stipulations by the finance department during the first 3 years after accreditation. In the following 2 years, 50% of such taxes shall be refunded. The sales tax and corporate income tax of an accredited projects with autonomous intellectual property converting advanced new technological achievements into productivity as well as that part of value-added tax which goes to the local treasury shall be listed in revenues and expenditures and refunded in accordance with the stipulations by the finance department during the first 5 years after accreditation. In the following 3 years, 50% of such taxes shall be refunded. Of the above-mentioned refund, 90% shall be paid to the enterprise and 10% to the investment and business-starting fund for centralized use. The sales tax on the revenue from transfer of an accredited project converting advanced new technological achievements into productivity shall be exempted. And that part of corporate income tax which goes to the local treasury shall be listed as revenue and expenditure by the finance department and refunded to the owner of the project. 6. As for enterprises registered in Shanghai and paying corporate income tax (foreign-invested enterprises included) that have invested after-tax profits made after January 1,1997 in an accredited project converting advanced new technological achievements into productivity and formed or augmented the capital of the enterprise, that part of corporate income tax collected which corresponds to the amount of investment and goes to the local treasury shall be listed in revenues and expenditures and be refunded to the enterprise in the following year on condition that the term of the contract of investment exceeds 5 years. 7. In the case of limited-liability companies and companies limited by shares set up by colleges and universities and research institutions in the process of converting advanced new technological achievements into productivity, the yields of colleges and universities and research institutions from stocks shall be determined in accordance with the finance and tax policies regarding the enterprises established by schools. Application-type research institutions that have been converted wholesale into high-tech enterprises may enjoy the preferential treatment granted in this article for a term of 5 years. 8. That part of tax that goes to the local treasury paid for hatching projects by a hatching base approved by relevant municipal departments shall be listed in revenues and expenditures by the finance department and refunded to the hatching base so as to accelerate the construction of high-tech industrial development zones and hatching bases in this Municipality. 9. If a government-sponsored product development or research project fails to convert conscientiously its achievements into productivity within the prescribed period of time, the government grant to the team and to the executor of the project shall be temporarily suspended . The social and economic benefits resulting from the conversion of advanced new technological achievements into productivity shall be included in the system of parameters for the comprehensive assessment of colleges and universities. 10. If advanced new technological achievements are invested as intangible property in projects converting them into productivity, their value may account for up to 35% of the registered capital. If there are specific provisions agreed on by the parties to the cooperation about the percentage, such provisions shall be followed. If advanced new technological achievements are invested as stocks, the person who made the achievements may acquire yields on the stocks corresponding to the investment. In the case of projects fully financed by the government, the person who made the achievements is entitled, in the first 3 years starting from the implementation of the project, to no less than 60% of the yields from the percentage of the stocks corresponding to that of the value of the achievements in the registered capital. In the subsequent 3 years, the percentage shall be no less than 40%. If advanced new technological achievements autonomously developed by an enterprise are invested as stocks, the person who made the achievements is entitled, in the first 3 years, to no less than 30% of the yields from the percentage of stocks corresponding to that of the value of the achievements in the registered capital. In the subsequent 3 years, the percentage shall be no less than 20%. When advanced new technological achievements are invested as intangible property, their value shall be assessed by a qualified property assessment agency. Or their value may be agreed on by the investors after consultation and set down in a written agreement, which shall be registered with the administrative departments of industry and commerce. In the case of any accredited advanced new technological achievement autonomously developed (secondary development included) by an enterprise, the chief person responsible for the achievement shall, in light of his/her contribution, be rewarded 10% to 15% of the after-tax profits realized in the first 3 years starting from its conversion into productivity, and 5% to 7% in the subsequent 3 years. In the case of any accredited advanced new technological achievements autonomously developed by an enterprise that does not belong to its mainline business areas , the chief person responsible for the achievement shall, in light of his/her contribution, be rewarded 20% to 30% of the after-tax profits realized in the first 3 years starting from its conversion into productivity, and 10% to 14% in the subsequent 3 years. If the advanced new technological achievement is transferred, the person who made the achievement shall be entitled to no less than 20 % of the income from the transfer. The person who acquires such income shall pay income tax. With the approval of the Municipal Government, the income tax so paid shall be listed in revenue and expenditure by the finance department at the same level and refunded to the payer. 11. A company established with an accredited project converting advanced new technological achievement into productivity shall not be restrained by its total wages. Its board of directors may decide autonomously upon the standard of wages for its employees with reference to the market labor prices and the guidelines published by the government for wage increases. All the wages paid out may be listed as cost. The returns of technical personnel engaged in the conversion of advanced new technological achievements into productivity from stocks, if invested in projects converting advanced new technological achievements into productivity, shall be deducted from the tax base. The salaries, drawn in Shanghai, of students returned from abroad who engage in the conversion of advanced new technological achievements into productivity may be regarded as income from abroad and may go by the stipulations of the additional deduction of the cost besides the deduction of the prescribed cost upon the calculation of the personal income tax to be paid. 12£®Projects brought into Shanghai by ministries and committees of the central government, other provinces and cities, students returned from abroad or foreign experts for the conversion of advanced new technological achievements into productivity and projects with autonomous intellectual property converting advanced new technological achievements into productivity shall, upon accreditation, be given equal priority in interest discount on loans and guarantees for financing. The products of such projects shall be given priority in government purchase. 13. When technical personnel and business managers come from other provinces or cities to Shanghai to engage in the conversion of advanced new technological achievements into productivity, they and their spouses and minor children may, with the recommendation of the Shanghai Service Center for the conversion of advanced new technological achievements into productivity, move to this Municipality and have their permanent residence registered without having to pay fees for urban construction. 14. Scientific and technical personnel in colleges and universities and research institutions shall be encouraged to start high-tech enterprises or engage in the conversion of advanced new technological achievements into productivity as a concurrent occupation. The units to which such personnel belong should continue to provide them with research and lab facilities for application research and product development. Scientific and technical as well as administrative personnel from colleges and universities and research institutions who leave their posts to start high-tech enterprises or engage in the conversion of advanced new technological achievements into productivity may retain their employment relationship with their original units. Scientific and technical as well as administrative personnel who start high-tech enterprises or engage in the conversion of advanced new technological achievements into productivity as a concurrent occupation or who leave their posts to engage in such activities should abide by the agreements with their original units and keep their commercial and technical secrets. If they need to use the commercial and technical secrets of their original units or other persons, they should sign a contract with their original units or other persons for permission or assignment to use such secrets. 15. An evaluation committee shall be set up to assess the qualifications of scientific and technical personnel in the field of the conversion of advanced new technological achievements into productivity for higher professional titles. This committee shall be responsible for the assessment of the qualifications of engineering and technical personnel, business personnel, administrative personnel as well as personnel engaged in intermediary service and organization who have made contributions in the conversion of advanced new technological achievements into productivity. Those who have distinguished themselves in the conversion of advanced new technological achievements into productivity may be awarded corresponding professional titles by waiving conventional constraints. 16. Scientific and technical personnel who have made outstanding achievements in the conversion of advanced new technological achievements into productivity shall be given priority in the recommendation to the Ministry of Personnel to be awarded the title of middle-aged and young experts who have made outstanding contributions to the country and be granted a government allowance. "Outstanding Service Prize of Shanghai Municipality in Science and Technology" shall be chiefly awarded to scientific and technical personnel who have made outstanding achievements in the conversion of advanced new technological achievements into productivity and people who implement the industrialization of advanced new technological achievements. Scientific and technological achievements that fall in the category of application research and product development but have not reached the phase of actual application shall not be accepted for appraisal or nominated for prizes at the municipal level. A Shanghai personnel cultivation fund shall be set up to help high-tech industries to bring in talented personnel and help chief implementers engaged in the conversion of advanced new technological achievements into productivity to settle special difficulties. 17. Accredited projects converting advanced new technological achievements into productivity should apply timely for patents if they qualify for patents and may properly be protected by patents. When an institution, enterprise or an individual in this Municipality applies for patents of invention both at home and abroad, the Municipal Science and Technology Commission shall help pay part of the application fee and patent retention fee. 18. The district/county governments and the relevant departments of the Municipal Government may formulate detailed rules for the implementation of these Provisions. In case the policies previously promulgated by this Municipality regarding the conversion of advanced new technology into productivity conflict with these Provisions, these Provisions shall prevail. |
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