The Ministry of Finance and the State Administration of Taxation issued several policies on enterprise income tax (EIT) in Lin-gang Special Area on July 31.

According to the policies, companies engaged in research and development (R&D) and production in four key industries in Lin-gang Special Area - integrated circuits, artificial intelligence, biomedicine, and civil aviation - will enjoy a preferential corporate income tax rate of 15 percent within the first five years after their establishment.

Enterprises that registered in Lin-gang Special Area by Jan 1, 2020 and are primarily engaged in production and R&D in the aforementioned industries will benefit from the policies.

Eligible enterprises also need to carry out R&D on or sell at least one key product or technology. A "key" product or technology is one that is considered indispensable in its respective industrial chain.

In addition, the Shanghai Municipal Finance and Taxation Department will work with industry authorities to identify specific operational techniques for key industrial enterprises and report them to the Ministry of Finance and the State Administration of Taxation.

The EIT preferential policies were implemented on Jan 1, 2020. If a qualified enterprise was registered in Lin-gang Special Area before Dec 31, 2019 and engaged in production or R&D, it will also benefit from these policies for five years starting from 2020.