The State Taxation Administration Provides Full Tax Refunds for Domestically Produced Equipment: 33 Categories of Instruments and Equipment and 10 Categories of R&d Institutions

On March 23, the State Taxation Administration issued an announcement regarding the "Administrative Measures for Value-Added Tax Refunds for the Purchase of Domestic Equipment by R&D Institutions" (hereinafter referred to as the "Administrative Measures"). The announcement clarifies that from January 1, 2019 to December 31, 2020, the full amount of value-added tax refunds will continue to be granted to R&D institutions (including domestic R&D institutions and foreign-funded R&D centers) for the purchase of domestic equipment.

According to Article 3 of the "Administrative Measures," the specific conditions and scope of "R&D institutions" and "domestic equipment" will be implemented in accordance with Announcement No. 91. According to Announcement No. 91, "R&D institutions" include 10 categories, and "domestic equipment" includes 33 categories, as follows:

33 Categories of "Domestic Equipment"

Technological development, scientific research, and teaching equipment refers to experimental equipment, devices, and instruments (excluding pilot-scale equipment) that meet the relevant provisions of Article 21 of the "Detailed Rules for the Implementation of the Provisional Regulations on Value-Added Tax of the People's Republic of China" (Order No. 50 of the Ministry of Finance and the State Taxation Administration) regarding "fixed assets," providing necessary conditions for scientific research, teaching, and technological development. Specifically, it includes the following four categories:

I. Experimental Environment

a) Teaching experimental instruments and devices;

b) Teaching demonstration and instruction instruments and devices;

c) Ultra-clean equipment (such as ventilation, sterilization, pure water, and purification equipment);

d) Special experimental environment equipment (such as ultra-low temperature, ultra-high temperature, high pressure, low pressure, and highly corrosive equipment);

e) Special power supply and light source equipment;

f) Cleaning and circulation equipment;

g) Constant temperature equipment (such as water baths, incubators, and sterilizers);

f) Small-scale pulverizing and grinding preparation equipment.

II. Sample Preparation Equipment and Apparatus

I) Specialized pumps (e.g., molecular pumps, ion pumps, vacuum pumps, peristaltic pumps, worm gear pumps, dry pumps, etc.);

II) Cultivation equipment (e.g., incubators, fermenters, etc.);

III) Micro-sampling equipment (e.g., samplers, precision balances, etc.);

IV) Separation, purification, and concentration equipment (e.g., centrifuges, chromatography, extraction, crystallization equipment, rotary evaporators, etc.);

V) Gas, liquid, and solid mixing equipment (e.g., vortex mixers, etc.);

VI) Gas generation equipment and gas compression equipment;

VII) Specialized sample preparation equipment (e.g., slicers, tablet presses, coating machines, thinners, polishing machines, etc.), laboratory injection, extrusion, granulation, and membrane pressing equipment, and laboratory sample pretreatment equipment.

III. Laboratory-Specific Equipment

A) Specialized photographic and video equipment (e.g., underwater, high-altitude, high-temperature, low-temperature, etc.);

B) Key equipment for scientific research aircraft and ships;

C) Specialized data recording equipment (e.g., large-format scanners, large-format plotters, magnetic tape players, optical disc players, etc.);

D) Specialized equipment for materials science (e.g., dry adhesive apparatus, special crucibles, ceramics, graphic conversion equipment, plate-making dry plates, special plasma sources, ion sources, epitaxial furnaces, diffusion furnaces, sputtering instruments, ion etching machines, materials testing machines, etc.), reliability testing equipment, microelectronics processing equipment, communication simulation equipment, communication environment testing equipment;

D) Small-scale smelting equipment (e.g., vacuum, powder, electroslag, etc.), specialized welding equipment;

E) Small-scale dyeing and finishing, spinning testing equipment;

Electrophysiological equipment.

IV. Computer workstations, medium and large-scale computers.

Ten Categories of "R&D Institutions"

I. Domestic R&D institutions and foreign-invested R&D centers eligible for the full refund of VAT on the purchase of domestically produced equipment include:

I) Institutions primarily engaged in scientific research and technological development that have been transformed into enterprises or entered into enterprises during the reform of the science and technology system, as approved by the Ministry of Science and Technology in conjunction with the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation;

II) National Engineering Research Centers approved by the National Development and Reform Commission in conjunction with the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation;

III) Enterprise Technology Centers approved by the National Development and Reform Commission in conjunction with the Ministry of Finance, the General Administration of Customs, the State Administration of Taxation, and the Ministry of Science and Technology;

IV) National Key Laboratories (including enterprise national key laboratories) and National Engineering Technology Research Centers approved by the Ministry of Science and Technology in conjunction with the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation;

V) Various research institutes engaged in scientific research under the ministries and commissions of the State Council and their directly affiliated institutions as approved by the Ministry of Science and Technology, as well as various research institutes under the governments at the same level as approved by the science and technology authorities of provinces, autonomous regions, municipalities directly under the Central Government, and cities with independent planning status;

(vi) Non-profit, privately-run science and technology institutions approved by the Ministry of Science and Technology in conjunction with the Ministry of Civil Affairs, or by the science and technology authorities of provinces, autonomous regions, municipalities directly under the Central Government, cities with independent planning status, and the Xinjiang Production and Construction Corps in conjunction with their respective civil affairs departments;

(vii) National SME Public Service Demonstration Platforms (technology-based) approved by the Ministry of Industry and Information Technology in conjunction with the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration;

(viii) Higher education institutions offering associate's degrees or above with nationally recognized academic qualifications (based on the list published on the Ministry of Education's website);

(ix) Foreign-invested R&D centers that meet the requirements of Article 2 of this announcement;

(x) Other scientific research institutions, technology development institutions, and schools approved by the Ministry of Finance in conjunction with relevant departments of the State Council.

II. Foreign-invested R&D centers, depending on their establishment date, shall meet the following conditions:

I) Foreign-invested R&D centers established on or before September 30, 2009, shall simultaneously meet the following conditions:

1. R&D expense standards: (1) For foreign-invested R&D centers, as independent legal entities, their total investment shall not be less than US$5 million; for non-independent legal entities, as internal departments or branches of a company, their total R&D investment shall not be less than US$5 million; (2) The annual R&D expenditure of the enterprise shall not be less than RMB10 million.

2. The number of full-time research and experimental development personnel shall not be less than 90.

3. The original value of equipment purchased since establishment shall not be less than RMB10 million.

II) Foreign-invested R&D centers established on or after October 1, 2009, shall simultaneously meet the following conditions:

1. R&D expense standards: For independent legal entities, their total investment shall not be less than US$8 million; for non-independent legal entities, as internal departments or branches of a company, their total R&D investment shall not be less than US$8 million. 2. The number of full-time research and experimental development personnel shall not be less than 150.

3. The original value of equipment purchased since its establishment shall not be less than RMB 20 million.

Foreign-invested R&D centers must undergo qualification review and certification by the commerce department in conjunction with relevant departments according to the above conditions. Specific review and certification methods are detailed in Appendix 1. Those who initially obtained tax refund eligibility or passed qualification re-examination before December 31, 2018 (inclusive) and have not yet completed two years of review can continue to enjoy the tax refund until the two-year period expires.

III. Domestic R&D institutions and foreign-invested R&D centers that commit serious tax-related violations or breaches of trust are not eligible for tax refunds. Specific tax refund management methods will be formulated separately by the State Taxation Administration in conjunction with the Ministry of Finance. The leading department responsible for the verification of relevant R&D institutions should promptly notify the tax authorities at the same level of the list of newly established, altered, and revoked domestic R&D institutions and foreign-invested R&D centers, specifying the start and end dates of the relevant qualifications.