China's State Administration of Taxation recently released an important rule on the appraisal and classification of high-tech enterprises, which sets a new threshold for high-tech companies to enjoy China's preferential taxes, according to the China Tech News.

Companies appraised as high-tech companies will be issued a certificate which will be valid for three years. During this period, the company can enjoy a 15% preferential tax policy.

The new rule says that high-tech companies must be those that are engaged in at least one of the eight fields under the key support of the national government: electronic information technology; aviation and space technology; high-tech services; resource and environmental technology; biology and new medicine technology; new materials technology; new energy and energy-saving technology; and traditional industries that have undergone high-tech transformations and have their own core intellectual property rights.

Other details include:

Income from high-tech products or services must account for more than 60% of the company's total income. Regarding human resources, the rule says that 30% of staff at high-tech companies must have a college diploma and technical staff with technology-related diplomas must account for more than 10% of the company's total staff. For R&D investment, the rule states that the companies must spend no less than 3%, 4% and 6%, respectively, of their annual sales income in the recent three years on R&D.

About the Author

Hayden Hong, the founder and CEO of Long Circle, has over a decade of outsourcing and consulting experience. Prior to founding Long Circle, Hong was the president and founder of MacaoDude, a consulting firm that counts among its clients Motorola, Nortel, and various high technology companies in the Boston 128 area. In 2005, Hong merged the two companies to provide U.S. companies with low-risk, convenient access to China’s engineering talent, manufacturing industry, and emerging markets. His background includes managing U.S.–China offshore R&D projects for GE, as well as management positions at Broad Reach Communications, a GE partner. Hong received a MSEE degree from Purdue University and a BSEE degree from Northeastern University, graduated magna cum laude.

About Long Circle

Long Circle provides outsourced engineering services to companies whose products and services rely on embedded software and hardware technology. Long Circle and the Long Circle China Center of Excellence enables U.S. companies to reduce costs, increase engineering bandwidth, and broaden market reach by providing low-risk, strategic access to China’s engineering talent, manufacturing industry, and emerging markets. To learn more about Long Circle, visit http://www.longcircle.com.