1. Company Background

Company B entered into agreement with its parent foreign company A for the provision of information system services since March, 2007. The related research and development period ranged from 2008-2014, which was divided into three stages.

Under the framework agreement, the supplementary contract amendments, the annexes and instructions will be signed every year and are classified into amendments 1-5. The contracts will be registered at the Technology Market Management Office (TM) and the Beijing Commission of Commerce (COC) outsourcing system to obtain the TM approval and the COC software export registration certificate respectively. According to the 2013 the software export contract registration certificate, companies can apply for the COC export financial subsidy.

At the time of registration on the COC technology import and export management registration system, the officer in charge could not proceed with the filing of the contract due to the contract lacking validity date, contract amount, contract content and fixed revenue amount.  Consequently, the company could not obtain the technology import and export contract registration certificate for the application of the financial subsidy, the 0% tax and the cross-border free tax qualifications.

2. RTF Solutions

Based on the framework agreement and the 5 amendments in 2008 and 2014, the contract accumulated value was estimated at RMB 580,000,000.  

Since the contract was recorded on the TM, COC, Local Tax Bureau, State Tax Bureau, RTF guaranteed the consistency throughout the overall contract and the 5 amendments.

RTF amended the contract in line with the technology import and export contract requirements, that is, emphasizing the validity period, contract amount, contract content, revenue fixed amount, to then successfully record and obtain the registration certificate of technology import and export contract.

3. Available Tax Incentives

1) Technology Export Financial Subsidy

According to the COC notifications in 2013, if any company was registered under the ITO software export service outsourcing system and is to apply for the subsidy, it will have to register the contract on the technology import and export management system to obtain technology import and export contract registration certificate. The subsidy criteria is for every 1 USD, obtain 0.06-0.1 RMB.

2) 0% Tax Rate

According to the State Administration of Taxation’s 2013 announcement no. 47,  any company providing 0% VAT rate cross border taxable services in the field of development and design which are to apply for VAT exemption or refund, are to provide the technology export contract registration certificate relative to their 0% VAT rate taxable services revenue.

3) VAT Exemption for Cross-border Taxable Services 

According to the 2013 Beijing State Administration of Taxation Announcement, for taxpayers providing overseas technology transfer services, technical consulting services, research and development services and design services who are to apply for VAT exemption, are required to provide the technology export contract registration certificate.