Provisional Regulations on Import Tax Policies for Major Science and Technology Special Projects

　　Financial and Customs Document [2010] No. 28

　　Article 1: In order to implement the requirements of the State Council’s Several Supporting Policies for the Implementation of the “National Medium- and Long-Term Science and Technology Development Plan Outline (2006–2020)” regarding the import tax policies for major science and technology special projects, to support the research and development of nationally significant strategic products, key common technologies, and major engineering projects, and to create an environment that encourages independent innovation, these Provisions are hereby formulated.

　　Article 2: Enterprises, colleges and universities, research institutes, and other public institutions (hereinafter referred to as “project implementing units”) undertaking major science and technology special projects (subjects) shall be exempt from import tariffs and value-added tax at the import stage on key equipment (including software tools and technologies), components, and raw materials required for their projects that cannot be produced domestically and are procured using funds allocated by the central government finance, local government finance, self-raised funds of the units, and funds obtained through other channels.

　　Article 3: The major science and technology projects referred to in Article 2 of these Regulations are the major science and technology projects involving civilian sectors that have been included in the “National Medium- and Long-Term Science and Technology Development Plan (2006–2020).” These include core electronic components, high-end general-purpose chips and basic software products, ultra-large-scale integrated circuit manufacturing equipment and complete process technologies, next-generation broadband wireless mobile communication networks, high-end CNC machine tools and basic manufacturing equipment, development of large oil and gas fields and coalbed methane, advanced pressurized water reactor and high-temperature gas-cooled reactor nuclear power plants, control and treatment of water pollution, breeding of new genetically modified organisms, development of major new drugs, and prevention and control of major infectious diseases such as AIDS and viral hepatitis.

　　Article 4: Project implementing entities applying to benefit from the import tax policies stipulated in these Regulations shall meet the following conditions:

　　1. Independent legal personality;

　　2. Approved by the Leading Group for Major Science and Technology Projects to undertake tasks under these major projects.

　　Article 5: Equipment, parts, and raw materials that the project implementing entity applies to import tax-free shall meet the following requirements:

　　1. Directly used for scientific research, technological development, and application in the project (subject), with import quantities within a reasonable range;

　　2. Products that cannot be manufactured domestically or whose domestic counterparts fail to meet the required performance standards, and which are of relatively high value;

　　3. The main technical specifications of equipment applying for tax-exempt import should generally be superior to those of the equipment listed in the “Catalog of Imported Goods Not Eligible for Tax Exemption under Domestic Investment Projects” currently in effect.

　　Article 6: To enhance the efficiency of using fiscal funds and import tax policies, when submitting equipment budget applications for instruments and equipment purchased with special funds allocated by the central and local governments, applicants shall proactively indicate whether they are applying for import duty exemptions and specify the relevant import taxes involved.

　　Article 7: The leading organizing units of each major science and technology special project (hereinafter referred to as the "leading organizing units") are responsible for implementing the import tax policies. They are tasked with receiving and reviewing application documents submitted by the project undertaking units, preparing and submitting lists of materials eligible for duty-free import under the major science and technology special projects, issuing the "Confirmation Letter for Imported Materials of Major Science and Technology Special Projects (Subjects)" (the format of which is shown in Appendix 1, hereinafter referred to as the "Confirmation Letter for Imported Materials"), and submitting reports on the implementation status of the policies, among other related matters.

　　For major science and technology projects involving two or more leading organizing units, the first leading organizing unit, together with the other leading organizing units, shall jointly organize and implement the matters mentioned above. If the leading organizing unit of a major science and technology project is an enterprise, the unit serving as the head of the project’s leading group shall be responsible for reviewing the application documents submitted by the project undertaking entity, preparing and submitting the list of tax-exempt imported materials required for the major science and technology project, and issuing the “Confirmation Letter for Imported Materials.”

　　Article 8: The Ministry of Finance, in coordination with the Ministry of Science and Technology, the National Development and Reform Commission, the General Administration of Customs, the State Administration of Taxation, and other relevant departments, shall, based on the import needs of major science and technology projects, combined with domestic and international production conditions and supply-demand dynamics, formulate and revise lists of tax-exempt imported materials for each major science and technology project. They shall also organize and implement annual implementation plans for these policies, conduct regular evaluations of the policies’ effectiveness, and make timely adjustments and improvements to the policies as necessary.

　　Article 9: The project implementing entity is the responsible party for enjoying this import tax policy and fulfilling the corresponding obligations. The project implementing entity shall submit the application documents for import duty exemption for the following year to the leading organizing entity by July 15 of each year (requirements are specified in Annex 2). Before receiving the “Confirmation Letter for Imported Materials,” the project implementing entity may, with the proof of application acceptance issued by the leading organizing entity, apply to customs for provisional release of the relevant imported materials against a tax bond. Project implementing entities that have already benefited from the duty-exemption policy in the previous year may, prior to receiving the current year’s “Confirmation Letter for Imported Materials,” directly apply to customs for provisional release of the relevant imported materials against a tax bond.

　　Article 10: The entity undertaking the project shall, prior to importing materials, apply to the customs authority in its jurisdiction for tax-exemption approval procedures, presenting the “Confirmation Letter for Imported Materials” and other relevant documents in accordance with the provisions of the “Administrative Measures for Tax Exemptions on Import and Export Goods of the People’s Republic of China” (General Administration of Customs Order No. 179).

　　For applications for duty exemption submitted by the project implementing entity for imported materials within the duty-free quota specified in the “Confirmation Letter for Imported Materials,” the customs will review the applications against the list of duty-exempt imported materials under major science and technology special projects and determine whether the relevant materials meet the duty-exemption requirements.

　　Article 11: To ensure timely performance evaluation of the policy, entities benefiting from the import tax policies stipulated herein shall, before February 1 each year, truthfully report to the leading organizing entity the implementation status of the policy for the previous year. The leading organizing entity shall, before March 1 each year, submit to the Ministry of Finance a report on the implementation of the import tax policies for major science and technology special projects, detailing the overall situation of materials actually exempted from duty in the previous year. A copy of this report shall also be sent to the Ministry of Science and Technology, the National Development and Reform Commission, the General Administration of Customs, and the State Administration of Taxation.

　　If the leading organizing entity fails to submit the required report as stipulated for two consecutive years, the special science and technology project will be barred from enjoying the import tax preferential policies under these regulations for one year. If the project undertaking entity fails to submit the required report as stipulated, that entity will be barred from enjoying the import tax preferential policies under these regulations for one year.

　　Article 12: The leading organizing entity shall, in accordance with the requirements of these Regulations, effectively manage the implementation of the import tax policies for major science and technology special projects, ensuring that the policies are implemented in a standardized, safe, and effective manner.

　　The project implementing entity shall, in strict accordance with the requirements set forth in these Regulations, truthfully submit the relevant documentation and handle the tax-exemption applications and import procedures for imported materials. If the project implementing entity violates these regulations by unauthorized transfer, sale, repurposing, or other disposition of tax-exempt imported materials, in addition to being dealt with according to applicable laws, regulations, and provisions, those found criminally liable under the law shall be barred from enjoying the import tax preferential policies stipulated herein from the date on which the illegal act is discovered. For those whose offenses do not yet warrant criminal prosecution, their eligibility to enjoy such import tax preferential policies shall be suspended for a period of two years from the date on which the illegal act is discovered.

　　Article 13: With the approval of the customs authorities, equipment imported duty-free by the project implementing entity may be used for scientific research, teaching activities, and technological development undertaken by other entities. However, without the prior consent of the customs authorities, such duty-free imported equipment may not be transferred out of the original project implementing entity. Upon completion of a major science and technology special project (or sub-project), the project implementing entity may promptly apply to the local customs authority for early release from customs supervision of any duty-free imported equipment still within the customs supervision period, as well as any remaining small quantities of raw materials and components. In such cases, the entity will be exempt from paying any additional taxes.

　　Article 14: These Regulations shall take effect as of July 15, 2010.