The Ministry of Finance and the State Taxation Administration of the PRC officially released a Circular on the Preferential Policies for Enterprise Income Tax in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (Caishui [2024] No. 2) and a Circular on the Preferential Policies for Individual Income Tax in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (Caishui [2024] No. 5) recently. The relevant preferential tax policies shall be implemented from 1 January 2023 to 31 December 2027. The specific provisions are as follows:

1. Enterprise Income Tax
   
   Qualified enterprises established in the specified areas of the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (starting from the Huanggang Port in the east, the Shenzhen River in the south, Xinzhou River in the west, and Ronghua Road in the north) may enjoy a reduced enterprise income tax rate of 15%.
   
   The relevant enterprises shall satisfy the following conditions:
   (1) Mainly engaged in the encouraged industries listed in the Catalogue of Preferential Enterprise Income Tax in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, and the main business income accounts for at least 60% of the total income.
   (2) Have substantial operations in the specified areas of the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone.
   
   The Catalogue of Preferential Enterprise Income Tax in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone covers four major areas of science and technology innovation, including information science and technology, materials science and technology, life science and technology and the operation of scientific and technological service institutions.
   
   
2. Individual Income Tax
   
   Hong Kong residents working in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone may be exempted from paying the portion of their individual income tax that exceeds the tax they would have paid in Hong Kong. The said individual income tax preferential policy applies to the entire Shenzhen Park, unlike the enterprise income tax preferential policy which is limited to the specified areas of the Shenzhen Park.

Note: The Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (HTCZ) consists of a park of 3.02 square kilometers on the Shenzhen side and another park of 0.87 square kilometers on the Hong Kong side.

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