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Regulations of Shanghai Municipality on Encouraging the Establishment and Development of Foreign-funded Research and Development Centers (the “Regulation”) came into effect on December 1, 2020. Once accredited as a foreign-funded R&D Center, it can enjoy customs clearance facilitation for cross-border R&D, cross-border financial services facilitation and tax preferential policies.
1. The Regulation applies to Foreign-funded R&D Centers, Global R&D Centers and Foreign-funded Open Innovation Platforms:
The “mandatory requirement” of the Foreign-funded R&D Centers and Global R&D Centers is the accumulative investment in research and development, and the special audit materials of investment in research and development shall be submitted to prove that the applicant meets the conditions for accreditation. Although the Foreign-funded Open Innovation Platform does not need to meet the “mandatory requirement” on the accumulative investment in research and development, it shall meet clear and specific conditions for accreditation on the total investment, the area of research and development site, and the number of signed R&D and innovation projects.
2. Competent Authorities for accreditation and Application
The municipal MOFCOM will be responsible for the accreditation and administration of Foreign-funded R&D Centers. The municipal MOFCOM will also coordinate with other municipal departments for administration and service for the Foreign-funded R&D Centers, such as departments of science and technology, development and reform, economy and informatization, education, exit-entry administration of the public security department, finance, market supervision, taxation, as well as the customs and so on.
According to the Regulation, the governments or departments responsible for the accreditation shall finish the decision-making process within 5 working days from the date of receipt of the application materials.
3. Preferential policies Foreign-funded R&D Centers may enjoy
(1) Customs Clearance Facilitation for Cross-border R&D
Accredited Foreign-funded R&D Centers may process the filing for the enterprises and the imported products for R&D on the "one-stop" service information platform of the Customs and may enjoy customs clearance facilitation for those products: Second-hand key R&D equipment to be imported for a period of less than 1 year, upon the approval of the Customs, may enjoy an extended period of stay. For vehicles that are imported for experimental testing and are required to be shipped out within 6 months, upon the approval by the Customs, the period of stay can be extended to 2 years at the most. The administration procedures for the entry of the above-mentioned special items will also be optimized.
(2) Cross-border Financial Services Facilitation
Banks will provide accredited Foreign-funded R&D Centers with convertible cross-border financial services including cross-border fundraising, trade in technology, franchising, as well as centralized fund management on the basis of free trade accounts. Convenience are available to support employees of Foreign-funded R&D Centers taking part in equity incentive schemes in accordance with law, and Shanghai will further provides Foreign-funded R&D Centers with facilitated convertible cross-border financial services based on individual free trade accounts for talent introduced from overseas. Procedures for foreign exchange settlement under non-trade accounts will also be optimized, contract filing and tax determination will be more efficient.
(3) Tax Preferential Polices
In the respect of tax preferential policies, accredited Foreign-funded R&D Centers importing supplies for scientific research as well as scientific and technological development are exempted from import tariff, value-added tax (VAT) and consumption tax at the import stage; and the VAT incurred with purchasing domestically-manufactured equipment will be fully refunded.
(4) Other Preferential Policies
In addition, qualified Global R&D Centers are entitled to funding support for the establishment (including rental) under the provisions of the special funds for the development of regional headquarters; Foreign-funded R&D Centers that obtain domestic and foreign invention patents will receive financial support in accordance with relevant provisions of the municipality. Qualified Foreign-funded R&D Centers can apply for pilot patent work demonstration units and enjoy relevant policies. And considerable convenience is also provided in respect of talent acquisition, entry and exit, stay and residence facilitation as usual.