China’s macro planner has launched a brand new catalogue of industries which are inspired for funding within the Hengqin New House cooperation zone in Zhuhai, Guangdong. Industries within the catalogue are eligible for quite a lot of preferential insurance policies, together with a person source of revenue tax waiver for eligible staff. The brand new catalogue is a part of a broader pressure to spice up the native economic system and extra combine Macao with the mainland by way of attracting funding and creating key industries within the area.
On April 3, 2023, the Nationwide Building and Reform Fee (NDRC), China’s macro planner, launched the Catalogue of Inspired Industries within the Hengqin Guangdong-Macao In-Intensity Cooperation Zone (the “Inspired Industries Catalogue”), a listing of industries which are inspired for funding and whose employees are eligible for positive preferential tax insurance policies within the Hengqin Guangdong-Macao In-Intensity Cooperation Zone (the “Hengqin Cooperation Zone”).
The Hengqin Cooperation Zone is a construction zone situated in Hengqin New House, an island district within the southern town of Zhuhai in Guangdong Province. The realm is separated from the Macao Particular Administrative Area (SAR) by way of a slender strip of water, and the 2 areas are attached by way of a chain of delivery hyperlinks, together with bridges, tunnels, and ferry routes. An extension of the Macao Mild Fast Transit is recently being constructed to achieve Hengqin Island and is predicted to open in 2025, additional facilitating cross-border commute.
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The Hengqin Cooperation Zone was once formally introduced in 2021 with the discharge of a construction plan for the area. This plan seeks to, amongst different objectives, deepen financial ties between Macao and the mainland by way of facilitating the motion of other folks around the border and creating strategic industries within the area.
The Inspired Industries Catalogue lists the industries during which employees are eligible for the zone’s unique preferential particular person source of revenue tax (IIT) insurance policies, which have been applied in early 2022 to draw high-end and in-demand ability to the world.
Additionally, firms working throughout the inspired industries integrated within the catalogue can be eligible for different supportive insurance policies, similar to land and investment allocation and application promises. Alternatively, with the exception of the preferential IIT coverage, the related government have now not but clarified the precise beef up insurance policies which are related to the Inspired Industries Catalogues.
The discharge of the brand new Inspired Industries Catalogue is the newest transfer to spice up the world’s construction and extra combine Macao’s economic system with the remainder of the Larger Bay House (GBA) by way of fostering key industries and attracting high-level ability.
Inspired industries within the Hengqin Cooperation Zone
The Inspired Industries Catalogue comprises 185 other sectors arranged into the next 5 classes:
- Era R&D and high-end production (70 sectors, together with built-in circuits, web and instrument products and services, and new polymer practical fabrics);
- Macanese industries similar to Chinese language conventional medication (24 sectors, together with Chinese language medication and new drug construction and manufacturing);
- Tradition, tourism, exhibition, and trade and industry (59 sectors, together with R&D of virtual cultural merchandise, commodity buying and selling, and cross-border e-commerce);
- Trendy finance (16 sectors, together with securities and futures brokerage, asset control, funding (buying and selling) consulting, funding banking, and different securities and futures carrier gadget development); and
- Different (16 sectors, together with upper schooling, world schooling, vocational talents coaching, and sports activities faculties).
The Inspired Industries Catalogue as a prerequisite for preferential IIT coverage
In January 2022, the Ministry of Finance (MOF) and State Tax Management (STA) launched the Preferential Particular person Source of revenue Tax Insurance policies for the Hengqin Guangdong-Macao In-Intensity Cooperation Zone. This report presented a brand new preferential IIT coverage for in-demand and high-end ability in particular industries within the Hengqin Cooperation Zone that waives the IIT burden at the portion of the source of revenue exceeding 15 p.c.
Along with different necessities, to be able to be eligible for this IIT coverage, the ability will have to paintings in one of the most 185 sectors within the Inspired Industries Catalogue, and the source of revenue will have to be generated throughout the Hengqin Cooperation Zone, as outlined within the construction plan (overlaying a 106 sq. kilometer house). This catalogue due to this fact replaces the transient catalogue of in-demand ability, which was once prior to now used to delineate the sectors with in-demand and high-end ability eligible for the preferential IIT coverage.
The source of revenue this is eligible for the IIT waiver beneath this coverage comprises complete source of revenue (together with wages and salaries, hard work remuneration, creator remuneration, and royalties), trade source of revenue, and skill subsidy source of revenue known by way of the native govt.
The preferential IIT coverage is in impact from January 1, 2021 to December 31, 2025.
Distinction between the Inspired Industries Catalogue and the Company Source of revenue Tax Preferential Catalogue
The Inspired Industries Catalogue isn’t to be puzzled with the 2021 version of the Guangdong-Macao In-Intensity Cooperation Zone in Hengqin Company Source of revenue Tax Preferential Catalogue (the “CIT Preferential Catalogue”), which lists the industries which are eligible for a discounted 15 p.c company source of revenue tax (CIT) charge within the Hengqin Cooperation Zone.
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Alternatively, there may be some overlap between the 2 lists—most of the business sectors integrated within the Inspired Industries Catalogue also are within the CIT Preferential Catalogue, similar to the ones within the generation R&D, Chinese language medication and different conventional Macanese industries, and tradition, tourism, and exhibitions, amongst others. Companies attractive in sectors indexed in each catalogues are eligible for each the lowered 15 p.c CIT charge and the 15 p.c IIT incentives (for certified workforce).
In the meantime, sectors within the fashionable monetary business and “different” industries similar to the learning sector are basically handiest eligible for the preferential IIT coverage and now not the CIT coverage.
The CIT Preferential Catalogue incorporates 150 other sectors (in comparison to the 185 sectors within the Inspired Industries Catalogue which are eligible for the preferential IIT coverage), throughout 9 other classes. Those classes are:
- Prime-end generation (56 sectors);
- Science and generation R&D (seven sectors);
- Chinese language conventional medication (4 sectors);
- Prescribed drugs and healthcare (21 sectors);
- Different Macanese industries (3 sectors);
- Cultural, exhibition, and trade (seven sectors);
- Tourism (10 sectors);
- Trendy products and services (36 sectors); and
- Trendy finance (six sectors).
Beneath we listing some examples of sectors integrated within the catalogues and their eligibility for the preferential IIT and CIT insurance policies.
| Examples of Sector Eligibility for Preferential IIT and CIT Insurance policies | ||
| Sectors | Eligible for preferential IIT coverage | Eligible for preferential CIT coverage |
| R&D, innovation, entrepreneurship, and cooperation facilities, similar to nationwide laboratories, analysis facilities, commercial innovation facilities, undertaking generation facilities, generation innovation facilities, science and generation infrastructure, and so forth | ✓ | X |
| Built-in circuit design, complicated packaging and trying out, feature procedure R&D and production, semiconductor apparatus and key subject matter R&D and production, built-in circuit chip design platforms (EDA equipment), comparable instrument R&D, and so forth | ✓ | ✓ |
| Sensible automobiles, new power automobiles, and key elements R&D | X | ✓ |
| New power car charging station generation and kit construction | ✓ | ✓ |
| Design and manufacturing of diamond, pearl, gold, and silver jewellery | X | ✓ |
| Building and manufacturing of cosmetics (with mercury content material now not exceeding one phase consistent with million) | ✓ | ✓ |
| Advent and manufacturing of radio and tv methods and degree artwork dramas (methods) | ✓ | X |
| Yacht R&D and production, sports activities boat production | ✓ | ✓ |
| Operation of film theaters, tradition and artwork, press and newsletter, pop culture, and common science amenities | X | ✓ |
| Securities firms and budget | ✓ | X |
| Pass-border database products and services | X | ✓ |
| Skilled complete products and services supplied by way of contract analysis organizations (CRO), contract production organizations (CMO), and contract analysis manufacturing organizations (CDMO) | ✓ | ✓ |
| Building of RMB cross-border agreement gadget | X | ✓ |
| Upper schooling, world schooling, vocational talents coaching, sports activities faculties | ✓ | X |
| Non-academic language coaching for adults | ✓ | X |
Selling financial construction and extra integration of Macao with the GBA
The Inspired Industries Catalogue and related preferential IIT coverage is handiest one in every of many preferential insurance policies that regional governments have applied to spice up the native economic system and expand key industries. Along with the preferential CIT coverage mentioned above, the world has presented a CIT waiver on source of revenue generated from new ODI in tourism, fashionable products and services, and high-end generation industries.
As well as, Macao citizens that paintings in Hengqin could have the portion in their tax burden raised within the Hengqin Cooperation Zone this is in way over Macao requirements exempted from IIT. In September 2021, the Hengqin Cooperation Zone additionally applied a praise program for particular ability, which has not too long ago been prolonged, in keeping with a Q&A from the Hengqin govt.
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The hassle to additional combine Macao with Zhuhai and the broader GBA may be an effort to diversify its economic system clear of tourism and gaming. Macao’s economic system is recently extremely reliant on those two sectors, making it extraordinarily liable to fluctuations on this planet economic system, as evidenced by way of the 26.8 p.c decline in GDP skilled in 2022 because of the COVID-19 pandemic. Encouraging extra cross-border alternate with Zhuhai and build up business within the Hengqin New House is was hoping to supply new financial alternatives for citizens of Macao, which in flip can lend a hand to spice up the island’s economic system.
In step with a Q&A issued by way of the NDRC, the Inspired Industries Catalogue serves to “information funding instructions, arrange funding tasks, and formulate and put in force commercial construction insurance policies, similar to ability and land”. {The catalogue} can due to this fact additionally function an funding information for international traders, because it obviously unearths the concern spaces for the native govt and the industries that can be eligible for extra preferential insurance policies one day.
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