HOW COMPANIES IN THE GREATER BAY AREA CAN ACCESS TAX INCENTIVES
Cities in the Greater Bay Area (GBA), which links nine cities in Guangdong with Hong Kong and Macau, already present foreign businesses with subsidies based on the size of their investment and future contribution to the local economy with specific requirements and reward schemes varying on a municipality and sector basis.
Shenzhen is an excellent example of how the GBA plans to facilitate a business friendly-bureaucratic framework, encouraging multinational companies to establish regional headquarters in its sophisticated environment. If companies meet requirements regulating their local and overseas entities’ registered capital and management structure, the approved headquarters are entitled to a reward ranging from RMB 3-6 million (£346,000-692,000).
Over the last few years, Shenzhen has also laid out a series of provisions to simplify the overall company incorporation process, which includes shortening the time of business license issuance to a few working days and introducing company secretary virtual addresses and dormant company status.
Investors aside, today Shenzhen is also one of the most attractive cities for local and international talents in the new technologies and logistics sectors. The Notice by the Ministry of Finance and the State Taxation Administration of the Preferential Individual Income Tax Policies for Guangdong-Hong Kong-Macao Greater Bay Area (No. 31  of the Ministry of Finance) has implemented an individual income tax (IIT) subsidy scheme aimed at foreign talents employed in the nine core cities of the GBA.
The policy aims to limit the total IIT burden for the fiscal year to 15% of the yearly taxable income, and provide a refund for the exceeding part when meeting a number of specific requirements set by each municipality taking part in the initiative from 1 January 2019 to 31 December 2023.
What corporate income tax benefits does the GBA offer?
Introduced nationwide via Announcement No. 24  of the State Administration of Taxation), a reduced corporate income tax (CIT) rate of 15% against the standard rate of 25% is granted to high-tech enterprises that are eligible for accreditation based on requirements that vary on a municipal level, based on:
- Establishment and business scope of the entity (i.e., encouraged industries of investment)
- IP protection and ownership
- Research and development-to-revenue ratio
- Personnel specialisation-to-total-organic ratio
- Innovation (graded system)
- Environmental protection
This regulation finds its best application in the GBA, where tech giants like Huawei, Tencent and Foxconn are based.
Startups and small or medium enterprises that might not fall into the above sectors or investment size can still benefit from the beneficial CIT rate granted by Article 2 of The Ministry of Finance and the State Administration of Taxation on the implementation of the inclusive tax relief policy for small and micro enterprises (Caishui  No. 12). This halves the progressive enterprise income tax rate previously set by (Caishui  No. 12) from January 1st 2021 to December 31st 2022.