Preferential Policies on Corporate Income Tax

1. A newly-established software enterprise, once certified, shall enjoy preferential policies on corporate income tax with “exemption from the first two years and half reduction in the next three years” since the profit-making year.

2. Salary and training expenses of software enterprises shall be arranged before corporate income tax based on the actual amount occurred.

3. Key software enterprises within the layout of the State failing to enjoy the preferential policies of tax exemption of the current year shall enjoy 10% corporate income tax reduction .

4. Enterprises qualified as hi-tech ones shall enjoy 15% corporate income tax reduction. Newly-established hi-tech enterprises shall enjoy corporate income tax exemption for successive two years from its putting into production.

5. Foreign-funded manufacturing enterprises having been under operation for more than ten years shall enjoy corporate income tax exemption in the first two years and half income tax reduction from the third to fifth year from the profit-making year.

Preferential Policies on Value-Added Tax

In terms of value-added tax, 17% legal tax shall be levied on taxpayers selling their independent software products prior to 2010. As for the actual tax levied exceeding 3%, the excessive part shall be withdrawn after taxation so that enterprises can use this part for developing software products and expanding reproduction.

Preferential Policies on Business Tax

Units and individuals (including foreign-funded enterprise, foreign-funded R&D centers established, foreign enterprises and foreigner) engaged in technology transfer, technology development and relevant technology consulting, and service shall enjoy business tax exemption.

Export Policies

1. Software enterprises with registered capital of RMB one million Yuan and above shall enjoy self-run export rights to software.

2. Tariff and import value-added tax shall be exempted with respect to equipment imported by software enterprises for their own purposes and technologies (including software) and accessories, spare parts imported along with the related equipment as contracted, with the exception of commodities listed in the Catalog of Import Commodities for Foreign Business Investment Projects with no Tax Exemption and Catalog of Import Commodities for Domestic Investment Projects with no Tax Exemption.

3. Export tariff shall be exempted with respect to export products of hi-tech enterprises and software enterprises unless otherwise been restricted for export or stipulated by the State.

4. Import tariff shall be exempted with respect to instruments and equipments incapable of being manufactured domestically and imported by hi-tech enterprises for hi-tech development   upon the approval document of related departments and the check from the Customs.

Other Preferential Policies

1. Certified high-end talents of Chinese citizens in the mainland with an annual salary of RMB 150,000 Yuan and above or foreigners with an annual salary of over RMB 500,000 Yuan shall be granted an annual amount of bonus in cash equaling 10% of their individual income tax based on the salary this year (dividend excluded);

2. Housing purchase or rent subsidies shall be granted to newly-entered world-famous software enterprises and large-scale research and development institutes;

3. Subsidies shall be granted based on the statistics of the Customs in accordance with the additional export volume of software and service outsourcing enterprises;

4. Subsidies shall be granted to employees of software and service outsourcing enterprises passing required English and Japanese tests;

5. Software service outsourcing enterprises entrusting world-famous software enterprises to conduct training for their high-end talents shall enjoy 50% training expense subsidy of no more than RMB 10,000 Yuan per person annually;

6. Round-trip international airline ticket subsidy shall be granted to employees of software and service outsourcing enterprises for research study or work in overseas;

7. 50% training subsidy (no more than RMB 3,000 Yuan per person for one-time) shall be granted to employees receiving training from professional training institutes and being employed by software service outsourcing enterprise with two (and above) years of labor contract.

8. A monthly subsidy of RMB 500 Yuan per person shall be granted to software service outsourcing enterprises accepting undergraduate for practice with the term not exceeding three months and the employees subsidized less than 20% of the total staff;

9. Subsidies shall be granted to software service outsourcing enterprises to develop international market and attend professional exhibitions and conferences;

10 .Providing financing services for software service outsourcing enterprises and appropriating subsidies for the guarantee enterprises;

11. Subsidies shall be granted to the expenses on international private leased circuit (IPLC) and video conference lines of software and service outsourcing export enterprises;

12. Relevant subsidies shall be granted to software enterprises obtaining patent rights, trademark rights, software copyright or software product registration.

13. Subsidies from RMB 100,000 to 500,000 Yuan shall be granted to enterprises passing Grade II to Grade V CMM/CMMI evaluations;

14. House rental subsidies shall be granted to domestic and foreign renowned institutes of human resource service, which offer such services to software service outsourcing enterprises.