Meaning
Administrative filing procedures require the formal submission of intellectual property transfer or technical service agreements to local science and technology bureaus. The technology contract registration functions as the prerequisite for a foreign invested enterprise to apply for a Value Added Tax exemption on specific imported or exported services. Once the local authority issues the registration certificate, the enterprise can proceed to the tax bureau and the bank for the legitimate cross border remittance of royalties.
Tax Incentive
Value added tax exemptions are only granted to those contracts that have successfully completed the official review process. A technology contract registration allows a firm to reduce its operational costs by up to six percent when providing research or design services to an overseas parent company.
Filing Requirement
Foreign exchange controls in China require the presentation of a registered contract before a bank will authorize the purchase of foreign currency. The technology contract registration ensures that the underlying transaction is authentic and that the payment amount complies with transfer pricing regulations.
Local Approval
Local bureau officials examine the technical details of the agreement to confirm that the project involves the genuine transfer of know how. This technology contract registration protects the rights of the parties by providing a government verified record of the intellectual property ownership.
