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Shanghai to Stimulate the Development of the Bio-Pharmaceutical Industry

July 30, 2009

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.


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