1. To encourage foreign investment in technology-intensive and knowledge-intensive projects, in accordance with the Interim Regulations of Reduction and Exemption from Enterprise Income Tax and Uniform Industrial and Commercial Tax in Special Economic Zones and 14 Coastal Port Cities from the State Council of the People’s Republic of China and practical considerations in Shanghai, the following measures are made.
2. The measures are applicable to every manufacture-oriented enterprise in the form of Chinese-foreign joint ventures, Chinese-foreign cooperative enterprises and exclusively foreign-owned enterprises (hereafter foreign invested enterprises) run in the old city proper so long as it meets requirement for technology-intensive or knowledge-intensive projects.
All the foreign invested enterprises satisfying the above requirement are entitled to a reduced 15% enterprise income tax.
3. Foreign invested enterprises of Shanghai can enjoy the favorite treatment on technology-intensive and knowledge-intensive projects only after they have submitted application and got approval.
4. Foreign invested projects can enjoy the favorite treatment on technology-intensive and knowledge-intensive projects if one of the following requirements is met:
1） Providing advanced manufacturing technology and craft urgently needed in Shanghai, producing urgently needed products (including new materials, key components and parts), or promoting the development and utilization of new energy in Shanghai;
2） Adopting advanced scientific and technical achievements with the result of considerably increasing the output, quality and property of product, effectively reducing production cost, saving energy and material, and promoting export and foreign exchange earning;
3） Promoting enterprise technical reform;
4） Providing urgently-needed key technical patent and knack (including advanced formula).
5. The responsible bureaus (district and county levels) in charge of the negotiation of foreign invested enterprise projects shall offer proof and preliminary views about whether the projects can enjoy the favored treatment on technology-intensive and knowledge-intensive projects in the tentative report. Shanghai Foreign Economic Relation & Trade Commission (hereafter referred to SMERT) shall consult the related commissions, offices, bureaus when examining and approving the projects and give response in line with its principles.
6. Foreign invested enterprises entitled to the favorite treatment on technology-intensive and knowledge-intensive projects shall submit application (printed by SMERT) to the responsible authorities two months prior to the tax-free expiration, and go through application formalities that are to be reported to SMERT after the responsible authorities (district and county level) raise opinions. After receiving the application, the SMERT shall examine and validate with Shanghai Science Technology Commission, Shanghai Economic Relation Commission, and other departments concerned, and give response within one month. Shanghai Taxation Administration shall handle tax reduction and exemption procedures in line with the response given.
7. The SMERT is responsible for the explanation of the measures.
8. The measures take effect from May. 1st, 1988.

1988