Journalism

Heavy weight!Re release of software enterprise conditions, applicable from 2020!

2021-05-07

With the announcement No.0 of 2021 issued by the Ministry of industry and information technology, the national development and Reform Commission, the Ministry of Finance and the State Administration of Taxation, The conditions that software enterprises need to meet are formally determined.

According to the requirements of the document, from January 1, 2020, companies that enjoy the two-year exemption and three-way reduction of software enterprises need to conduct benchmarking according to the requirements of the new policy to see whether they can meet the requirements of software enterprises.

According to the document, software enterprises encouraged by the state should meet the following seven conditions at the same time:

1、 Enterprises established in China (excluding Hong Kong, Macao and Taiwan) according to law, mainly engaged in software product development and related information technology services, and have independent legal personality;The establishment of the enterprise has a reasonable commercial purpose, and the main purpose is not to reduce, exempt or delay the payment of taxes;

This clause can be understood from the following perspectives:

1. Enterprises must be resident enterprises with independent legal personality. The branch company does not have the independent legal person status, and can not enjoy the software enterprise preferential treatment alone, but can be enjoyed by the head office according to the whole branch office.After the head office calculates the income tax payable, according to the principle of apportionment between the head office and the branch office, the branch company indirectly enjoys the preferential treatment for software enterprises.


2. The main business of the enterprise is software product development and related information technology services. In accordance with the notice on the requirements for making the list of integrated circuit enterprises or projects and software enterprises enjoying preferential tax policies (fggj [2021] No. 413, hereinafter referred to as "No. 413 document"), relevant information technology services refer to consulting design, software operation and maintenance, and data services directly related to the realization of software product functions.


For the determination of the main business, under normal circumstances, when the sum of software income and related information technology service income accounts for more than 50% of the total income of the enterprise in the current year, it can be determined that the main business of the enterprise is software product development and related information technology services.


3. The establishment of an enterprise has a reasonable commercial purpose, and the main purpose is not to reduce, exempt or delay the payment of taxes. This regulation is more stringent than the old policy (referring to Cai Shui [2016] No. 49 document, the same below).In practice, some enterprises (especially those selling hardware and software combination) will split the company into a software enterprise and an equipment enterprise in order to enjoy the tax preference of software enterprises more conveniently.Software enterprises sell software products to equipment enterprises, and then sell them to customers after they are assembled.


In this mode, software enterprises and equipment enterprises are affiliated enterprises, and the software products of software enterprises are only sold to one equipment enterprise.Whether this kind of transaction arrangement meets the requirements of "reasonable commercial purpose" may exist in practice.

2、 In the final settlement year, there are labor contract relations, labor dispatch and employment relations, among which the monthly average number of employees with bachelor's degree or above accounts for no less than 40% of the total monthly average number of employees in the enterprise, and the proportion of the average number of research and development personnel in the average monthly total number of employees of the enterprise shall not be less than 25%;

This clause can be understood from the following perspectives:

1. Personnel scope. The employees of software enterprises can be those who sign labor contracts, or they can be dispatched through labor service companies.

2. Proportion requirements. The proportion of personnel with bachelor's degree or above should be more than 40%, and the proportion of R & D personnel should be more than 25% (5% higher than the original policy). Software enterprises should pay more attention to talents with higher education.

3. Total number of employees. From the meaning of the document, the total number of employees here should include both the personnel who signed the labor contract and the personnel dispatched through the labor service company.In a sense, the "total number of employees" here should be the concept of "number of employees".

4. Statistical caliber. No matter what kind of personnel, when determining the number, it is required to calculate by monthly average.Calculation method of monthly average:

Monthly average personnel = (number at the beginning of the month + the number at the end of the month) × 2

Annual monthly average = sum of monthly average of each year × number of existing months of the enterprise in the current year


3、 Having the core key technology and carrying out business activities on this basis, the proportion of the total annual R & D expenses in the total sales (business) revenue of the enterprise shall not be less than 7%, and the proportion of the total R & D expenses incurred by the enterprise in China shall not be less than 60%;

This clause can be understood from the following perspectives:

1. R & D expenses. At present, there are many R & D expenditure policies in China, including accounting R & D expenses, high-tech recognized R & D expenses, plus deduction R & D expenses, and R & D expenses applying for project funds.When enjoying the preferential treatment for software enterprises, the policy clearly refers to the standard of additional deduction of R & D expenses, including the Ministry of finance, the State Administration of Taxation, the State Administration of Taxation, etcThe notice of the Ministry of science and technology on improving the policy of pre tax plus deduction of R & D expenses (CS [2015] No. 119) and the announcement of the State Administration of Taxation on issues related to the collection scope of pre tax additional deduction of R & D expenses (Announcement No. 40 of the state Administration of Taxation in 2017).


2. The proportion of R & D expenses. The policy requires that the proportion of the total annual R & D expenses in the total sales (operating) revenue of the enterprise shall not be less than 7% (1 percentage point higher than the previous policy).The ratio of R & D expenses to sales revenue here is only calculated in the year when the tax preference is granted. Unlike the preferential treatment for high-tech enterprises, the ratio of R & D expenses to sales revenue in the past three years should be calculated.


4、 The proportion of annual software product development and sales and related information technology service (business) revenue in the total enterprise income shall not be less than 55% [the proportion of embedded software product development and sales (business) revenue in the total enterprise income shall not be less than 45%],Among them, the proportion of revenue from independent development and sales of software products and related information technology services (business) shall not be less than 45% of the total enterprise income [the proportion of embedded software product development and sales (business) revenue in the total enterprise income shall not be less than 40%];

This clause can be understood from the following perspectives:

1. Software revenue statement. Software revenue includes "software product development and sales and related information technology services (business) revenue". Compared with the old policy, the expression of software revenue is more rigorous and easier to be understood and controlled by enterprises.

2. The proportion of software revenue. Compared with the old policy, both the proportion of self-produced software revenue and the proportion of software revenue increased by 5 percentage points, highlighting the importance of software revenue.

3. Total revenue. The total revenue here refers to the concept of total revenue in Article 6 of the enterprise income tax law. It should not be confused with the concept of "total sales (business) revenue" used in the calculation of the proportion of R & D expenses in the previous article.


5、 The main business or main products have patents or computer software copyrights and other intellectual property rights belonging to the enterprise;


Compared with the old policy, the expression of this clause is more specific.The intellectual property rights owned by enterprises are limited to "patent" and "computer software copyright".

Does the patent here only refer to "invention patent"?

In Document No. 413, no less than two invention patents are required for key software enterprises.For general software enterprises, do they have to have invention patents?


There is no further clarification in the document.From the document description, for general software enterprises, the patents should not be limited to invention patents, but also utility model patents or design patents.


At the same time, it should be noted that for general software enterprises, patents and software works are not required to be owned at the same time, which is different from the requirements for key software enterprises in document 413.

6、 It has the development environment (such as legal development tools, etc.) of production and operation places, software and hardware facilities suitable for software development, and establishes a quality management system that meets the requirements of software engineering and operates continuously and effectively;

Compared with the old policy, it increases the requirements for software enterprises to establish quality management system.How does this requirement prove to have been fulfilled?

If an enterprise applies for the certification of ISO9000 quality management system and obtains the corresponding certificate, it will be more reliable to use the certificate as the proof material.


7、 No major safety accident, major quality accident, intellectual property infringement and other acts occurred in the year of final settlement, and the enterprise operated legally.

Compared with the old policy, it cancels the expression of "serious environmental violations" and adds the expression of "intellectual property infringement, enterprise legal operation", which is more in line with the actual operation of software enterprises.



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