Circular of the Ministry of Commerce on Forwarding the Reply of the General Office of the State Council to Issues concerning Facilitation of Service Outsourcing Industry

Shang Zi Han [2009] No. 4

The people’s governments of Beijing, Tianjin, Shanghai, Chongqing, Dalian, Shenzhen, Guangzhou, Wuhan, Harbin, Chengdu, Nanjing, Xi’an, Jinan, Hangzhou, Hefei, Nanchang, Changsha, Daqing, Suzhou and Wuxi,

For the purpose of carrying out the spirits of “maintenance of growth, expansion of domestic demands and adjustment of structure” of the Central Economic Work Conference and positively responding to the financial crisis to vigorously undertake international outsourcing services, change the economic and trade development mode, optimize export structure, improve the level of utilization of foreign investment, promote regional development in a coordinated way and expand the employment of students graduated from universities and colleges, the State Council has printed and issued the Reply to Issues concerning Facilitation of Service Outsourcing Industry (Guo Ban Han [2009] No. 9), which is hereby forwarded to you for implementation as soon as possible.

Ministry of Commerce of the People’s Republic of China

Jan. 22, 2009

Reply of the General Office of the State Council to Issues concerning
Facilitation of Service Outsourcing Industry

Guo Ban Han [2009] No.9

The Ministry of Commerce,

Your request for instructions on several policy suggestions on facilitation of the service outsourcing industry has been received. Upon approval of the State Council, the reply is hereby given as follows:

I. We agree to make 20 cities, including Beijing, Tianjin, Shanghai, Chongqing, Dalian, Shenzhen, Guangzhou, Wuhan, Harbin, Chengdu, Nanjing, Xi’an, Jinan, Hangzhou, Hefei, Nanchang, Changsha, Daqing, Suzhou and Wuxi, as China’s demonstration cities for service outsourcing to further undertake international service outsourcing business and promote the pilot development of the service outsourcing industry.

II. We give our consent to the implementation of the following policies and measures in the aforesaid 20 cities:

(1)    On the basis of continuous implementation of the relevant pilot tax policies on the service enterprises with advanced technologies in Suzhou Industrial Park, the service enterprises with advanced technologies that satisfy conditions may pay enterprise income tax at the reduced tax rate of 15% from Jan. 1, 2009 to Dec. 31, 2013. The employment education funds of the service enterprises with advanced technologies shall be deducted before the payment of enterprise income tax according to the proportion of no more than 8% of the total amount of the wage expenditure of the enterprises. Service enterprises with advanced technologies shall be exempted from the business tax on its offshore service outsourcing business. The specific standards for service enterprises with advanced technologies shall be separately promulgated by the Ministry of Finance together with the relevant departments.

(2)    With respect to the service enterprises with advanced technologies that meet conditions and has normative administration on labor and employment, some of their positions, which are actually unable to implement the work system of standard working hours due to production features, may implement the work system of special working hours upon approval of the local human resources and social security department at the provincial level.

(3)    Once any service outsourcing enterprise with advanced technologies meeting conditions employs a person with educational background of junior college or higher to engage in service outsourcing and concludes a labor contract with him for one year or more, the central treasury shall provide the enterprise with the training support of no more than RMB4,500 per person. Once a professional (with educational background of junior college or higher) engaged in service outsourcing business, who is trained by a qualified training institution, has passed the examinations on professional knowledge and competence of service outsourcing, and concludes a labor contract with a service outsourcing enterprise for one year or more, the central treasury shall provide the training institution with training support of no more than RMB500 per person.

(4)    The central treasury shall provide necessary funds support for the demonstration cities for service outsourcing to purchase and operate public service platform equipment and for service outsourcing enterprises to establish brands, protect intellectual property rights, participate in all kinds of the relevant exhibitions at home and abroad, international promotion meetings, and achieve international qualification certification. The relevant requirements prescribed in the Circular of the General Office of the State Council on Forwarding the Guiding Opinions of the National Development and Reform Commission and Other Departments on Regulating the Establishment and Operation of Guiding Funds of Venture Capital (Guo Ban Fa [2008] No. 116) shall be put into effect to encourage the investment in service outsourcing enterprises with venture capital. The loans for the projects of construction of service outsourcing infrastructure in economic and technological development zones at national level in central and western China may be subject to the policies of central finance discount.

(5)    Governments and enterprises are encouraged to outsource such businesses as data processing irrelevant to secrets to professional enterprises by such means as purchase of service. The telecom service providers shall provide conveniences including network access and renting of international routes to service outsourcing enterprises, and offer good services on preparation of international special channels for direct access to international communications gateway exchanges by service outsourcing parks and on the relevant communication services. The clearance inspection mode that meets the features of service outsourcing industry shall be adopted and improved to provide conveniences for clearance accordingly.

(6)    Credit products and insurances that meet the features and demands of service outsourcing enterprises may be provided. The service outsourcing enterprises that satisfy certain conditions are encouraged to go listing overseas so as to expand their financing channels and enhance their abilities in financing. The service outsourcing enterprises that make overseas payments less than certain amount for trade in services, incomes and current transfer exchange account may be exempt from submission of tax vouchers. Multi-measures may be adopted to provide conveniences on respect of policies involving opening of account and aggregation of capital for the service outsourcing enterprises that satisfy conditions to enable them to develop their offshore outsourcing business.

III. We agree to establish international service outsourcing talents database and the long-term system of e-recruitment of service outsourcing talents, and set up service outsourcing research institutions and trade organizations. The researches on theories of service outsourcing shall be enhanced and self-discipline of the industry shall be strengthened. The regulations on confidentiality of business information data and standards relating to service outsourcing industry in China shall be formulated. You shall be responsible for specific issues together with the relevant departments.

IV. You shall, together with the relevant departments and local governments, enhance your guidance on and service for works in pilot cities and take facilitation of service outsourcing industry as an important way to promote structural adjustment, change the development mode of foreign trade and increase employment of students graduated from universities and colleges.

General Office of the State Council of the People’s Republic of China

Jan. 15, 2009