July 30, 2009

Shanghai to Stimulate the Development of the Bio-Pharmaceutical Industry

On July 30, 2009, the Shanghai Municipal Government released Several Provisions on Encouraging the Development of the Bio-Pharmaceutical Industry in Shanghai (the "Provisions"), effective the promulgation date.  The Provisions stipulate that enterprises and institutions registered in Shanghai that engage in the R&D, production, sale and outsourcing of bio-products, chemical pharmaceuticals, medical apparatus, and medical materials, etc., could become entitled to certain financial support, tax benefits and other favorable treatment.  According to the Provisions, a qualified high-tech bio-pharmaceutical project could receive financial support of up to 10% of the total investment of such project, and certain other critical R&D projects could be entitled to financial support of up to 30% of the total investment of the project. High-tech enterprises and service enterprises with advanced technologies could enjoy a preferential enterprise income tax ("EIT") rate of 15%.  The income of a bio-pharmaceutical enterprise derived from technology transfer, technology development or technical consultation service is exempted of business tax, and the first RMB 5 million of income from a qualified technology transfer is exempted of EIT.  Incomes from other non-specified businesses could enjoy 50% off the regular EIT.  Other types of assistance such as banking, capital market, public purchase, and market entry services will also be made available to bio-pharmaceutical organizations pursuant to the Provisions, with the goal to encourage the development of the bio-pharmaceutical industry.

Copyright ©2009 by Kaye Scholer LLP. All Rights Reserved. This publication is intended as a general guide only. It does not contain a general legal analysis or constitute an opinion of Kaye Scholer LLP or any member of the firm on the legal issues described. It is recommended that readers not rely on this general guide but that professional advice be sought in connection with individual matters.References herein to "Kaye Scholer LLP & Affiliates," "Kaye Scholer," "Kaye Scholer LLP," "the firm" and terms of similar import refer to Kaye Scholer LLP and its affiliates operating in various jurisdictions.

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