On 13 June 2023, Lingang Special Area (a state-approved high-profile sub-zone within Shanghai Free Trade Zone) issued its economic substance requirements governing the manufacturing or R&D companies operating in Lingang, seeking to enjoy the 15%-rated corporate income tax (CIT) incentives granted by the zone.
The said rules are never a pioneer since similar requirements have been issued by six other economic zones in China. Lingang’s practice still draws extensive attention due to its prominent status and enviable accomplishment in its short (four-year) history – its GDP has grown at an average annual rate of 21.2%, surpassing Shanghai’s 4%. It is also the home to Tesla’s first super-plant and R&D hub in China.
The new announcement, taking effect retroactively from 1 January 2023, is a sequel to a previous announcement dated 2020. It is issued jointly by four major Shanghai authorities (namely Shanghai Municipal Tax Service, Shanghai Municipal Finance Bureau, Shanghai Municipal Commission of Economic and Information, and the Management Committee of Lingang Special Area).
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