The Provincial Development and Reform Commission, together with other departments, issued the “Guidelines for Venture Capital in Hainan Free Trade Port, 2021 Edition” (hereinafter referred to as the “work guide”) which aims to further standardize and improve venture capital service management in Hainan province, and promote the sustainable and healthy development of the venture capital industry.
According to the work guidelines, venture capital refers to the equity investment in unlisted venture enterprises in the process of establishment or reconstruction, so as to obtain capital appreciation income mainly through equity transfer after the venture enterprises are mature or relatively mature.
Venture capital enterprise refers to the enterprise organization registered and established in the People’s Republic of China mainly engaged in venture capital.
Start-up enterprises refer to growing enterprises registered and established within the territory of the People’s Republic of China in the process of establishment or reconstruction, but excluding those listed in the public market.
The “Work Guidelines” points out that the state implements record management of venture capital enterprises.
The record management departments for venture capital enterprises are divided into two levels: the management department of the State Council and the provincial (including sub-provincial cities) management department.
The administrative department of the State Council is the National Development and Reform Commission, and the administrative department of Hainan Province is the Hainan Provincial Development and Reform Commission.
Venture capital funds need to be filed with the China Securities Investment Fund Association (hereinafter referred to as “CFIA”), and can be filed in Hainan development and Reform Commission after filing with CFIA.
The work guidelines set the filing conditions, investment operation and supervision methods for venture capital enterprises in the development and reform departments, and announced preferential policies for Hainan venture capital enterprises.
Preferential policies include:
Tax preferential policies, free trade port development dividends, fast business registration and supporting policies.
Preferential tax policies include:
Low corporate income tax:
First, for venture capital enterprises that are established in the Hainan Free Trade Port and meet the requirements, 70% of the investment in small and medium high-tech enterprises and start-up technology enterprises can be used to deduct taxable income, and second they can enjoy an enterprise income tax discount of 15% for industries encouraged by the Hainan free trade port.
Low Personal income tax: Qualified venture capital experts, whose comprehensive and business income is derived from the Hainan free trade port and the talent subsidy income recognised by Hainan Province, can enjoy the preferential policy of exempting that part of individual income tax that exceeds 15%.
At the same time, the Hainan Free Trade Port continues to promote the establishment of “reducing materials, links, time, and expenses” for enterprises.
At present, companies can independently register through the “Hainan e-Registration” platform, and the time for starting a company will be reduced to one working day before the end of the year.
The work guidelines also provide detailed answers to the frequently asked questions about the registration, filing annual inspection and tax policies of venture capital enterprises.