On August 6, 2019, the State Council issued the Overall Plan for the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone. The Lin-gang Special Area is set to benchmark against the most competitive free trade zone recognized internationally, and implement open policies and systems with international market competitiveness, to realize the convenience of foreign investment, business operation and capital flow, facilitate the import and export of goods, and offer highly connected transportation network.

Lin-gang Special Area is located to the south of Dazhi River, east of Jinhui Port, and southern area of Xiaoyangshan Island and Pudong International Airport in Shanghai, with a total area of 819 square kilometers. Under the principle of "Overall Planning and Step-By-Step Implementation", Nanhui New City, Lin-gang Equipment Industrial Zone, Xiaoyangshan Island, and the southern area of Pudong Airport will be the pilot areas, covering an area of 119.5 square kilometers.

By 2025, a sound system will be developed to promote investment facilitation and trade liberalization, and more open and functional platforms will be established, to build 100-billion-yuan-level industrial clusters, with regional GDP quadrupled compared to 2018. By 2035, a special economic functional zone with strong influence and competitiveness in the international market will be created, with a resident population of about 2.5 million and a regional GDP of over 1 trillion yuan ($140 billion).

Preferential Policies

Since the inauguration of Lin-gang Special Area, 18 industrial support policies have been issued to focus on and support the four major industries of integrated circuits, artificial intelligence, biomedicine, and aerospace, which are explicitly promoted in Lin-gang Special Area by the State and Shanghai Municipal Government. These policies focus on supporting advanced manufacturing and strategic emerging industries such as new-generation information technology, high-end equipment manufacturing, intelligent connected vehicles, new materials, new energy, energy conservation and environmental protection. With coordinated support of major projects and specific funding programs initiated by the State and the Shanghai Municipal Government, core enterprises can enjoy 15 percent corporate income tax policy.

Integrated Circuits

Companies and organizations that undertake and achieve breakthrough in the research of core technologies will be granted a funding of up to 50 percent of the technology R&D expenditure.

Enterprises engaged in the research and development of integrated circuit EDA design tools will enjoy a subsidy of up to 50 percent of R&D expenditure, limited to a maximum of 30 million yuan.

Enterprises adopting Multi-Project Wafer (MPW) will enjoy a subsidy of up to 3 million yuan. Enterprises that deliver full mask tape out for the first time will enjoy a subsidy of up to 50 percent of the tape-out cost, but not exceeding 20 million yuan.

Enterprises that sell core equipment and materials independently developed and manufactured for integrated circuits will be awarded a bonus of up to 30 percent of the sales revenue, a one-time award of up to 10 million yuan.

Enterprises that are recognized as the manufacturer offering materials and IC packaging and testing services will enjoy a subsidy of 50 percent of electricity bills, with annual funding not exceeding 5 million yuan.

Biomedicine

Enterprises that have obtained clinical approval for new medicine, medicine manufacturing approval, and medicine marketing approval will be granted a funding of up to 3 million yuan for each approval (license). For drugs that have been marketed and redeveloped with new indications, enterprises will receive a maximum funding of 2 million yuan, with annual funding not exceeding 10 million yuan.

Enterprises that have obtained medical device certificate, pharmaceutical production certificate (license) will be granted a funding of up to 2 million yuan, with annual funding not exceeding 5 million yuan.

Institutions that have obtained international and domestic professional qualifications in the field of biomedicine will be granted a one-time funding of up to 1 million yuan for each qualification, with annual funding not exceeding 5 million yuan for an individual institution.

Biopharmaceutical enterprises that have marketing license and have been identified and registered in Lin-gang Special Area will be awarded 1 percent of year-on-year sales revenue increase, limited to a maximum of 5 million yuan, provided that the sales tax of their manufactured products is settled in Lin-gang Special Area.

Artificial Intelligence

A maximum of 20 million yuan will be granted for the projects that have led industrial development or achieved disruptive breakthrough in the research and development of the core technologies involving artificial intelligence chips, core algorithms, operating systems, fundamental software, and intelligent sensors.

Artificial intelligence enterprises registered in Lin-gang Special Area with actual capital of no less than 20 million yuan will be awarded 5 percent of the paid-up capital, but not exceeding 5 million yuan.

Artificial intelligence enterprises that are newly registered or relocated in Lin-gang Special Area with shares acquired through fund investment such as Angel investment and venture capital will be granted a one-time settlement support of 10 percent of the fund investment, limited to a maximum of 5 million yuan.

Demonstration projects and scenario investment providers will be awarded 30 percent of the investment and procurement involving artificial intelligence technologies, products, and services, with a maximum of 3 million yuan, and the institutions that provide related technologies, products and services will be awarded 50 percent of the actual R&D expenditure, with a maximum of 2 million yuan.

Aerospace

The domestic and foreign aerospace industrial leaders and SME enterprises with actual capital of no less than 50 million yuan will be awarded 3 percent to 5 percent of the paid-up capital, with a maximum of 10 million yuan for an individual enterprise.

Manufacturing-oriented enterprises with annual sales revenue exceeding 500 million, 1 billion, 5 billion, 10 billion yuan for the first time will be awarded four-level bonus of no more than 1 million, 2 million, 3 million, 5 million yuan respectively, and the bonus difference will be made up when the enterprises level up.

Over 10-million-yuan mergers and acquisitions of the enterprises or key R&D institutions in domestic and foreign aerospace industries will enjoy a subsidy of 5 percent of the actual acquisition cost, accumulatively no more than 5 million yuan.

Testing and verification of the function, performance, and reliability of engineering prototypes (samples) will enjoy a subsidy of 50 percent of the actual cost, with annual subsidy no more than 2 million yuan.

Aerospace equipment manufactures recognized as national or municipal demonstration enterprises or workshops in the area of intelligent manufacturing will enjoy a one-time subsidy of 2 million yuan (in addition to municipal subsidy), and 1 million yuan respectively.

Finance

Licensed financial institutions settled in Lin-gang Special Area with a certain scale of paid-up capital will be awarded a settlement bonus of no more than 60 million yuan.

New financial institutions settled in Lin-gang Special Area with a certain scale of paid-up capital will be awarded a settlement bonus of no more than 20 million yuan.

Equity investment companies settled in Lin-gang Special Area with a certain scale of paid-up capital will be awarded a settlement bonus of no more than 20 million yuan.

Newly established financial institutions that purchase self-use office space in Lin-gang Special Area will enjoy a subsidy of up to 12 percent of the actual purchase price, limited to a maximum of 60 million yuan; for renting self-use office space, a maximum subsidy of 100 percent of the annual rent will be granted for a period of up to three years.

Newly established functional institutions in the line of finance that purchase self-use office space in Lin-gang Special Area will enjoy a subsidy of up to 6 percent of the actual purchase price, limited to a maximum of 20 million yuan; for renting self-use office space, a maximum subsidy of 100 percent of the annual rent will be granted for a period of up to three years.

Yangshan Special Comprehensive Bonded Area

Goods not subject to inspection and quarantine or verification of regulatory credentials for import and export can directly leave the port upon submission of requests for release;

Trade processing manuals are no longer required for companies located within the bonded area, which are exempted from administrative processes such as manual registration and verification. Companies in the area can carry out businesses such as merchandise transfer, container consolidation, warehousing, processing, trade, exhibition, research and development, remanufacturing, and inspection and maintenance, exempted from customs approval;

Except for prohibited items, goods and items imported by companies in the area and used for R&D within the area are exempted from submission of licenses;

Third-party inspection and testing institutions or certification bodies are encouraged to provide import/export inspection and certification services within the area. Remanufacturing of aerospace and engineering equipment and CNC machines with advanced technology and high value added is allowed in the area.

Bonded warehousing and exhibition of imported vehicles are allowed in the area.

Talents

The required period of stay for residents to receive household registrations is reduced from seven years to five years, and is further shortened to three years for those eligible as core talents in priority industries;

Applicants who are employed by key institutions as core personnel with skills in short supply and are holders of a bachelor's degree or above with a minimum of two years' working experience in related areas are eligible for immediate household registration;

High-caliber overseas talents with skills in urgent need are granted subsidies for the difference in individual income tax payable;

Foreign students who intend to start their own businesses in Lin-gang Entrepreneurial Park are granted a work permit. Their start-up experience in the park will be deemed as work experience;

Returned overseas Chinese with a foreign nationality who work in the Lin-gang Special Area may apply for long-term Foreign Talent Residence Permits (Category B Permit, with a maximum validity of 10 years) and are exempt from work permit application;

Foreign employees who work as technical experts in companies registered in the area are granted a work permit with a validity of a minimum of two years if certain conditions are met.

Source of attachment: Shanghai Municipal Commission of Economy and Informatization