Shanghai's New Subsidy Policy
Commencing on February 1 and extending until January 31, 2029, an innovative subsidy policy for multinational corporations (MNCs) in Shanghai has been enacted. This initiative is a cornerstone of Shanghai's comprehensive strategy, recently unveiled with a meticulous work plan boasting 150 initiatives. The primary objective is to augment the city's business environment, drawing in foreign investments and enterprises.
The freshly introduced subsidy program is a linchpin in the overarching plan to attract an increased number of MNCs to establish regional headquarters and research and development (R&D) centers in Shanghai. The ultimate goals are to amplify the presence of foreign-invested businesses and elevate the overall quality of foreign investments. Eligible MNCs can benefit from financial support, with 60% provided by the district government and the remaining 40% by the city government. Additionally, the district government offers rental subsidies for qualifying MNCs.
To be eligible for these subsidies, companies operating in Shanghai must meet stringent criteria. This includes a legal and continuous operation of over one year, demonstrating both economic and social benefits. Financially, these companies must exhibit commendable financial and tax standings, with no history of default within the last three years. The application process places a premium on the authenticity, accuracy, and completeness of submitted materials. Companies are explicitly prohibited from making repeated requests for financial assistance on the same matter.
The subsidy standards are meticulously outlined, encompassing both business establishment and rental subsidies. For business establishment subsidies, companies must meet specific criteria to qualify for a 5-million-yuan (about US$695,000) subsidy. This includes having a paid-up registered capital of no less than US$30 million, a minimum of 10 employees, recognition as an MNC regional headquarters or divisional headquarters in Shanghai after November 1, 2022, and authorization by the parent enterprise to manage at least one domestic or foreign enterprise.
For R&D centers to qualify for a 5-million-yuan subsidy, they must have no fewer than 50 full-time research and development personnel and be recognized as a global research and development center in Shanghai after December 1, 2020. The establishment subsidy will be provided over three years based on the ratio of 4:3:3, and all MNCs should submit the application materials within three years of being recognized as an MNC regional headquarters or global research and development center.
Rental subsidies are contingent on various requirements, including paid-up registered capital, office space specifications, and recognition as an MNC regional headquarters or divisional headquarters in Shanghai after November 1, 2022. The subsidies are provided over a three-year period based on 30% of the rent.
Additionally, high-level rewards and operational rewards are introduced, with a 3-million-yuan reward criterion for MNCs designated as regional headquarters or divisional headquarters for the Asia-Pacific region or a larger geographic area in Shanghai. Operational rewards are structured based on annual revenue thresholds, with one-off rewards provided over three years.
Capital-increase rewards are outlined for MNCs investing in foreign-funded projects aligning with Shanghai's industrial development orientation. This involves a one-off reward of 2 million yuan corresponding to the annual increment of actual foreign investment amount, with a commitment not to reduce, withdraw, or convert domestic capital within three years.
The application and review process is outlined comprehensively, involving the publication of application notifications by the Shanghai Commission of Commerce, the submission of required materials by MNCs, third-party institutions processing these materials, and the final decision-making process undertaken by the commission and the Bureau of Finance. Subsequently, relevant authorities are duly informed about the audit outcome.
Source : City News Service
Editor : Ennio Colombo Giardinelli