Part 1: Support policies

1. Service industry development guidance funds

★ Regulations on the Utilization and Administration of Shanghai's Service Industry Development Guidance Funds (Shanghai Municipal People's Government Regulation No 22 of 2022)

Classification of guidance fund support

(1) Major demonstration projects: Projects with a total investment of 30 million yuan ($4.23 million) or more, which play a crucial role in driving the development of the city's service industry and exhibit advanced technology or innovative models, receive support from guidance funds at both municipal and district levels.

For major demonstration projects, the municipal-level guidance fund support generally does not exceed 6 million yuan. However, for major functional service industry projects in the city requiring support beyond this limit, the support amount will be determined by the review panel.

(2) Key projects: Projects with a total investment of 10 million yuan or more are eligible for support from guidance funds at both municipal and district levels.

For key projects, the maximum proportion of municipal-level guidance fund support does not exceed 20 percent of the total project investment, with the support amount not exceeding 3 million yuan. For major strategic research and service industry park-planning, the maximum proportion of municipal-level guidance funds do not exceed 20 percent of the contract amount.

District-level support: Districts, where major demonstration projects and key project companies receiving municipal-level guidance fund support are located, should ideally allocate funds at a ratio of no less than 1:1 compared to municipal support. Additionally, the three suburban districts of Jinshan, Fengxian, and Chongming can allocate funds at a ratio of no less than 1:0.5 compared to municipal support.

2. Support for cultural and creative industries

★ Regulations on the Administration of Fiscal Support Funds for Promoting Development of Cultural and Creative Industries in Shanghai" (Shanghai Cultural and Creative Industries Promotion Office No 38 of 2018)

Funding for cultural and creative endeavors is distributed and utilized through methods such as gratuitous assistance and subsidized loans. The allocation and amount of support funds are determined based on factors such as the project's functional focus, service methodologies, and total investment. Gratuitous assistance is categorized into pre-support and post-support, with individual project support generally not exceeding 50 percent of the total investment when adopting the pre-support method. Projects opting for post-support must meet specific requirements outlined in the "Application Guidelines".

District-level Support: Each district must adhere to this directive and allocate supporting funds for projects in line with the characteristics of regional cultural and creative industry development. The district-level support ratio should be no less than half (1:0.5) of the municipal level (excluding projects with significant characteristics of public service platforms or talent team construction). Projects with a 1:1 district-level support ratio compared to the municipal level will receive priority assistance under equal conditions.

3. Support for urban digital transformation in Shanghai

★ Regulations on the Administration of Special Funds for Urban Digital Transformation in Shanghai (Shanghai Commission of Economy and Informatization Regulation No 9 for 2022)

The special funds utilize methods such as gratuitous assistance and rewards. In principle, each project should use only one method.

Support from the special funds should adhere to the following guidelines:

(1) For projects supported through gratuitous assistance, the support ratio generally does not exceed 30 percent of the approved total project investment, with a maximum support amount of 5 million yuan;

(2) For projects supported through rewards, the maximum individual reward amount is 500,000 yuan based on evaluation results;

(3) Projects conducted in cooperation with relevant national departments in Shanghai as part of urban digital transformation pilots, experiments, or demonstrations shall receive support according to the requirements of relevant national or local departments. For projects supported through gratuitous assistance, 50 percent of the support amount will be disbursed initially, and the remaining support funds will be disbursed based on evaluation results after the projects pass the final acceptance. For projects supported through rewards, the reward amount will be disbursed once after passing the evaluation.

4. Support policies for the development of the creative and design industries

★ Implementation Measures for Promoting the Development of Shanghai's Creative and Design Industries (Shanghai Commission of Economy and Informatization Document No 339 for 2018)

To implement the Several Opinions of the State Council on Promoting the Integrated Development of Cultural and Creative Industries, Design Services, and Related Industries, Shanghai is accelerating efforts to recognize high-tech enterprises and those providing advanced technology services in the cultural and creative industries and design services sector.

For cultural, creative, and design enterprises recognized as high-tech or advanced technology providers, corporate income tax will be levied at a reduced rate of 15 percent; Staff education expenses, up to 8 percent of the total wage amount, are deductible when calculating the taxable income.

Qualified creative and design expenses incurred by various enterprises are eligible for a 150 percent pre-tax deduction policy, with technology-based small and medium-sized enterprises eligible for a 175 percent pre-tax deduction.

5. Identification of innovative enterprise headquarters

★ Administrative Measures for the Identification and Reward of Innovative Enterprise Headquarters in Shanghai (Shanghai Development and Reform Commission Regulation No 3 for 2023)

Headquarters of innovative enterprises meeting the following conditions are eligible to apply for subsidies and rewards:

(1) Innovative enterprise headquarters that are registered in or relocated to Shanghai after January 1, 2022, with a paid-in registered capital exceeding 100 million yuan, may be granted up to a maximum of 5 million yuan in start-up subsidies.

(2) For innovative enterprises headquarters meeting the conditions in item (1), subsidies of 30 percent of the rent, up to a maximum of 8 yuan per square meter per day for office space not exceeding 1,000 square meters, will be provided by the relevant district for three years; self-built office space will receive subsidies based on the above standards on an annual basis.

(3) Innovative enterprise headquarters achieving annual sales revenue of 500 million yuan, 1 billion yuan, and 1.5 billion yuan since January 1, 2022, and contributing no less than 10 million yuan to the local economy growth, will be rewarded with 5 million yuan, 3 million yuan, and 2 million yuan respectively.

6. Special funds for intellectual property rights

★ Administrative Regulations on the Special Funds for Intellectual Property Rights in Shanghai (Shanghai Intellectual Property Administration Regulation No 1 for 2022)

Funding of up to 200,000 yuan will be provided for the establishment of geographical indication products' protection and demonstration zones approved by the national intellectual property authorities. Additionally, funding of up to 800,000 yuan will be provided for newly recognized zones.

A maximum funding of 300,000 yuan and 100,000 yuan will be provided respectively for the newly recognized standardization market and cultivation market for intellectual property protection, as identified by the national intellectual property authorities.

7. Entrepreneurship and innovation demonstration platforms

★ Administrative Regulations on Science and Technology Innovation and Entrepreneurship Platforms in Shanghai (Shanghai Commission of Science and Technology Regulation No 12 for 2023)

Platforms included in the city's cultivation system, rated grade B (excellent) or above in the annual evaluation, will receive financial subsidies of up to 50 percent of their annual investment in enhancing professional incubation capacity, expanding brand presence and services, and fostering international incubator exchanges and cooperation. These funds must be used in compliance with relevant national and local regulations.

Among them, university science parks, technology start-up incubators, and maker spaces rated grade A (outstanding) will receive subsidies of up to 1 million yuan, 600,000 yuan, and 400,000 yuan respectively. Those rated grade B (excellent) will receive subsidies not exceeding 50 percent of the grade A subsidy.

Matching funds will be provided by the respective district science and technology authorities.

 

Part 2: Fiscal and tax policies

1. Matters concerning the halving of cultural undertaking construction fees in Shanghai

★ Notice on Matters Concerning the Halving of the Construction Fees for Cultural Undertakings (Shanghai Finance and Taxation No 19 for 2019)

From July 1, 2019, to December 31, 2024, construction fees for cultural undertakings belonging to local revenue in this municipality shall be halved, with taxpayers obligated to pay only 50 percent of the original fee amount.

2. Matters regarding pre-tax deduction of advertising and business promotion expenses

★ Announcement on Matters Regarding Pre-tax Deduction of Advertising and Business Promotion Expenses (Announcement No 43 of 2020 from the Ministry of Finance and the State Taxation Administration)

From January 1, 2021, to December 31, 2025, expenses related to advertising and business promotion incurred by enterprises engaged in the manufacturing or sale of cosmetics, pharmaceutical manufacturing, and beverage manufacturing (excluding alcoholic beverages) shall be deductible up to 30 percent of the current year's sales (operating) revenue. Any excess amount may be carried forward for deduction in subsequent tax years.

3. Tax and fee policies further supporting the development of small and micro enterprises and individual industrial and commercial households

★ Announcement on Tax and Fee Policies For Further Supporting the Development of Small and Micro Enterprises and Individual Industrial and Commercial Households (Announcement No 12 of 2023 from the Ministry of Finance and the State Taxation Administration)

From January 1, 2023, to December 31, 2027, individual industrial and commercial households are entitled to a 50 percent reduction in individual income tax on the portion of their annual taxable income not exceeding 2 million yuan. Individual industrial and commercial households can enjoy this preferential policy on top of other existing preferential policies on individual income tax.

From January 1, 2023, to December 31, 2027, small-scale VAT taxpayers, small low-profit enterprises, and individual industrial and commercial households are entitled to a 50 percent reduction in resource tax (excluding water resource tax), urban maintenance and construction tax, property tax, urban land-use tax, stamp duty (excluding stamp duty on securities transactions), cultivated land occupation tax, educational surcharges, and local educational surcharges.

Small low-profit enterprises calculate their taxable income at a reduced rate of 25 percent and pay corporate income tax at a rate of 20 percent, and this policy is extended till December 31, 2027.

4. VAT reduction and exemption policy for small-scale VAT taxpayers

★ Announcement on the Value-Added Tax Reduction and Exemption Policy for Small-scale VAT Taxpayers (Announcement No 19 of 2023 from the Ministry of Finance and the State Taxation Administration)

Until December 31, 2027, small-scale taxpayers with monthly sales revenue of less than 100,000 yuan (inclusive) are exempt from VAT. For small-scale taxpayers with monthly sales exceeding 100,000 yuan, VAT shall be levied at a reduced rate of 1 percent on taxable sales revenue subject to a 3 percent tax rate; for items subject to a 3 percent advance tax rate, VAT shall be prepaid at a reduced rate of 1 percent.

5. Further implementation of tax and fee reduction policies for small and micro enterprises

★ Announcement on Further Implementing the "Six Taxes and Two Fees" Reduction and Exemption Policies for Small and Micro Enterprises (Announcement No 10 of 2022 from the Ministry of Finance and the State Taxation Administration)

As determined by the provincial-level governments based on the actual circumstances of the local region and in accordance with macro-control needs, small-scale VAT taxpayers, small low-profit enterprises, or individual industrial and commercial households may be eligible for a 50 percent or less reduction in resource tax, urban maintenance, and construction tax, property tax, urban land use tax, stamp duty (excluding securities trading stamp duty), farmland occupation tax, educational surcharge, or local education surcharges.

6. Policies supporting financing for small and micro enterprises

★ Announcement on Tax Policies Supporting Financing for Small and Micro Enterprises (Announcement No 13 of 2023 from the Ministry of Finance and the State Taxation Administration)

From August 2, 2023, to December 31, 2027, loan contracts signed between financial institutions and small or micro enterprises shall be exempt from stamp duty.

 

Part 3: Employment stability policies

1. Policies continuing one-time subsidies to encourage job creation

★ Notice on Strengthening the Implementation of Supportive Fiscal and Tax Policies to Promote High-Quality Development of Small and Medium-sized Enterprises (Budget No 76 of 2023 from the Ministry of Finance)

To support small and micro enterprises that hire recent university graduates and individuals who have been unemployed for up to two years after graduation, the social insurance subsidy policy will be implemented as stipulated.

2. Policies on reducing unemployment and work injury insurance rates for a specified period

★ Notice from the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Taxation Administration Regarding the Reduction of Unemployment and Work Injury Insurance Rates for a Specified Period (Notice No 19 of 2023 from Ministry of Human Resources and Social Security)

Starting from May 1, 2023, the policy to maintain the unemployment insurance rate at 1 percent will be extended through the end of 2024.

3. Adjustment of the policy for charging fees to the Disabled Persons Employment Security Fund

★ Announcement from the Ministry of Finance on Adjusting the Policy for Charging Fees to the Disabled Persons Employment Security Fund (Announcement No 98 of 2019 from the Ministry of Finance)

From January 1, 2023, to December 31, 2027, employers whose workforce includes 1 percent or more of people with disabilities, but falls short of the ratio specified by the provincial-level government, may pay 50 percent of the required amount to the Disabled Persons Employment Security Fund.

Employers who employ people with disabilities at a rate of less than 1 percent may pay 90 percent of the prescribed fund amount.

Enterprises with a staff of 30 people or fewer will remain exempt from contributing to the fund.

 

Part 4: Other Policies

1. Support for cross-border trade in services

★ Guiding Catalogue for Promoting Services Trade in Shanghai (2023 Edition) (Shanghai Commission of Commerce Document for Trade in Services No 291 for 2023)

V. Professional services trade

(A) Professional services in consulting, accounting, legal, advertising, human resources

Objectives: To expand the accessibility of professional services to international markets, elevate the standards and quality of professional services, and nurture competitive advantages in providing essential professional services like management consulting, accounting, legal, advertising, and human resources through policy guidance and supportive measures to encourage local enterprises engaged in professional services to extend their services across borders, facilitate the provision of professional services for overseas investments by Chinese enterprises, and foster a cohort of professional service brands with global impact.

Key areas for development:

4. Advertising services:

(1) The business scope indicated on the Business License includes activities such as advertising production, design, brokerage, and publication; (2) The previous year's turnover in professional services exceeds 10 million yuan, with an export volume of services exceeding $30,000.

2. Recognition of advertising designers

★ Notice from the Shanghai Municipal Bureau of Human Resources and Social Security on the Announcement of the Third Batch of Public Training Assessment Agencies for Recognizing Levels of Occupational Skills in Shanghai (Shanghai Bureau of Human Resources and Social Security Vocational Document No 116 for 2023)

I. Newly added public training assessment agencies
No	Name	Occupation (Trade)	Level
9	Shanghai Advertising Association	Advertising Designer	3、2、1

The profession of advertising designer has been included in the Catalogue of Occupations (Trades) for Urgently Needed Highly skilled Talents in Shanghai, making it eligible for supportive policies in talent recruitment as per regulations.

3. Vocational training for employees

★ Guiding Opinions from the Shanghai Municipal Bureau of Human Resources and Social Security Bureau and three Other Departments on the Use of Local Special Funds Generated from Educational Surcharges by Districts to Carry Out Vocational Training for Employees (Shanghai Bureau of Human Resources and Social Security Vocational Document No 51 for 2021)

Enterprises providing in-house training for employees will receive a fixed subsidy of 600 yuan per person per program (the subsidy standard is adjusted timely according to economic and social development and price levels).

Enterprises that engage agencies other than the listed training institutions to conduct vocational training will be eligible for the same training subsidies as for in-house training.

 

Source: Shanghai Observer