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Sichuan Introduces Measures to Encourage Enterprises to Increase R&D Investment
Updated:2021.01.05

  Recently, Sichuan Provincial Department of Science and Technology, Sichuan Provincial Department of Finance and Sichuan Provincial Tax Service Administration of State Taxation Administration jointly released the Interim Measures of Sichuan Province to Put in Place the Subsidy for Enterprises Encouraged to Increase R&D Investment. This is the first time that Sichuan Province has released the measures of such kind.

  Who will get the subsidy? As required by the document, enterprises and cities (prefectures) will be the two types of recipients. For enterprises, either basic research, applied research or experimental development can be identified as corporate research and development as long as this creative and systematic work is carried out to increase knowledge stock and involve new applications of existing knowledge. In addition to the basic requirements, there is also a requirement for the R&D investment increase amount of over 10 million yuan. For cities (prefectures), it is necessary to formulate and implement incentive policies for corporate R&D investment, and to make fiscal investment at municipal level.

  How to get the subsidy? For enterprises, post-R&D subsidy is identified based on whether the early-stage investment has occurred or whether it has been converted into real productivity. Enterprises whose R&D investment continues to increase shall be given post-R&D subsidy according to the increase amount. What are the specific procedures? Provincial direct subsidy adopts the form of post-R&D subsidy, and is calculated according to the increase amount of the R&D investment declared to the tax authorities for pre-tax deduction from the income tax payable for the last and first years of an enterprise's accounting cycle. The subsidy amount is calculated through the method of the progressive refund in excess of certain amounts in certain brackets, and the specific proportions shall be made clear in the declaration notice depending on the budget of the year.

  For cities (prefectures), the R&D investment subsidy is calculated according to a city's or a prefecture's fiscal input in encouraging enterprises to increase R&D investment in the year prior. The subsidy amount is calculated on specific proportions, and the specific proportions shall be made clear in the declaration notice depending on the budget of the year.

  As stated in the document, enterprises and cities (prefectures) subsidized shall use the provincial fiscal subsidy to carry out scientific and technological innovation activities, and shall not use it to pay fines, donations, sponsorship, debts and other spending, nor pay wages and retirement costs for on-the-job personnel who enjoy government staff status, and other expenses prohibited by state regulations.

  This document will come into effect on January 1, 2021.


 
 
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