Shanghai introduces new policy to attract multinational corporations

The new welfare policy for multinational corporations development subsidies was launched on February 1, 2024, and will run through January 31, 2029.

Shanghai has unveiled an enhanced business environment blueprint, introducing 150 initiatives. These measures reflect Shanghai's steadfast commitment to fostering a premier international business environment. The plan highlights Shanghai's efforts to facilitate foreign investment and expatriate settlement.

In order to encourage multinationals to establish headquarters and research and development centers in Shanghai, accelerate the development of the foreign-invested businesses and improve the quality of foreign investment , the policy for multinational corporations development subsidy was established.

Multinational corporations that intend to or have already set up headquarters and research and development centers in Shanghai have the opportunity to receive considerable funds, with financial support provided by both the district government (60 percent) and the municipal government (40 percent). Additionally, the district government will provide rental subsidies for those multinational corporations which qualify.

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Application requirements

1. Companies established in Shanghai must have operated legally and continuously for over one year, and have accumulated sufficient economic and social benefits;

2. Having commendable financial and tax credits and sound financial management structure. Must not be listed by national, provincial, and municipal government as dishonest judgment debtors. There should be no record in the list of defaulters on the city's public credit information service platform within the past 3 years;

3. Companies must submit foreign-invested enterprise information reports as required.

Applicants are prohibited from repeatedly applying for financial assistance for the same matter. Be responsible for the authenticity, accuracy, and completeness of the application materials.

Requirements

Establishment subsidy standard

1.The requirements of 5 million yuan (about US$695,000) subsidies for multinational corporation:

• Paid-up registered capital no less than US$30 million;
• No less than 10 employees;
• Recognized as multinational corporation regional headquarters or divisional headquarters in Shanghai after November 1, 2022;
• No less than one domestic and foreign enterprise authorized by the parent enterprise to be responsible for its management.

2. The requirements of 5 million yuan subsidies for research and development center:

• No less than 50 full-time research and development personnel;
• Recognized as global research and development center in Shanghai after December 1, 2020;

3. The establishment subsidy will be provided over 3 years based on the ratio of 4 : 3 : 3.

4. Note that is that all the multinational corporations should submit the application material within three years of being recognized as a multinational corporation headquarters or global research and development center.

Rental subsidy requirements

1. Requirements to get a three-year subsidy based on 30 percent of the rent:

• Registered capital paid in shall not be less than US$2 million;
• No less than 10 employees;
• Recognized as multinational corporation regional headquarters or divisional headquarters in Shanghai after November 1, 2022;
• No less than one domestic and foreign enterprise authorized by the parent enterprise to be responsible for its management;
• No more than 1000 square meters office space (excluding ancillary facilities and supporting rooms), with a maximum daily rent of 8 yuan per square meter;
• For the purchase or construction of self-used office space (excluding ancillary facilities and supporting rooms), a one-time funding subsidy will be provided based on the total three-year amount of the rental subsidy.

2. For global research and development centers recognized in Shanghai after December 1, 2020, with no fewer than 50 full-time research and development personnel, a rental subsidy can be enjoyed according to the same standards.

3. Enterprises should submit rental subsidy applications within three years of being recognized as regional headquarters, divisional headquarters, or global research and development centers.

4. During the subsidy period, self-used office space shall not be leased or sublet, and the purpose of the office space shall not be altered. Violations of the above provisions shall require the return of the received subsidy.

High-level reward requirements

Criteria of 3 million yuan reward:

• Registered capital of no less than US$2 million;
• No less than 50 employees;
• Designated as the regional headquarters or divisional headquarters for the Asia-Pacific region or a larger geographic area in Shanghai;
• Directors or key senior management personnel appointed by the parent enterprise are based in Shanghai.

Operation reward requirements

1. Multinational corporations with regional headquarters in Shanghai, having paid-up registered capital of no less than US$2 million, and annual revenues of 500 million yuan or more:

• For the portion of annual revenue reaching 500 million yuan but less than 1 billion yuan, a one-time award of 5 million yuan will be given;
  
• For the portion of annual revenue reaching 1 billion yuan but less than 1.5 billion yuan, a one-time award of 3 million yuan will be given;
• For the portion of annual revenue reaching or exceeding 1.5 billion yuan, a one-time award of 2 million yuan will be given.

2. Multinational corporations with divisional headquarters in Shanghai, with a paid-up registered capital of no less than US$2 million and annual revenues of 1 billion yuan or more:

• For the portion of annual revenue reaching 1 billion yuan but less than 1.5 billion yuan, a one-time reward of 5 million yuan will be granted;
• For the portion of annual revenue reaching 1.5 billion yuan but less than 2 billion yuan, a one-time reward of 3 million yuan will be granted;
• For the portion of annual revenue reaching or exceeding 2 billion yuan, a one-time reward of 2 million yuan will be granted.

3. The reward will be provided over three years based on the ratio of 4 : 3 : 3. Enterprises are required to submit an application in the year following the achievement of the operational reward criteria.

Capital increase reward requirements

1. A one-time capital increase reward of 2 million yuan:

• Regional headquarters or divisional headquarters of multinational corporations investing in foreign-funded projects that align with Shanghai industrial development orientation (excluding real estate, finance, and similar financial projects);
• The annual increment of actual foreign investment amount should not be less than US$30 million;
• Only one capital increase reward can be enjoyed during the implementation period;
• The capital increase reward corresponds to the amount of increased capital, which should be calculated based on the actual foreign investment amount included in the annual statistics of the Ministry of Commerce. The applicant unit must commit in writing not to reduce, withdraw, or convert domestic capital within three years;
• The amount of capital increase corresponding to the capital increase incentive shall be calculated based on the amount included in the actual foreign investment statistics of the Ministry of Commerce;
• The applicant shall make a written commitment not to reduce, withdraw, or switch to domestic investment within three years.

2. Enterprises should hand in the application material after the year of the amount of capital increase.

3. Applications for both capital increase reward and establishment subsidies are not allowed within the same year.

Application and Process

1. The Shanghai Municipal Commission of Commence will publish the notification of headquarters capital application and clarify the application requirements;

2. All qualified multinational corporations may sign up for the application and provide the required application material;

3. The Shanghai Municipal Commission of Commence will entrust a third-party institution to process the material. The Commission will then re-examine the material based on the results of the third-party institution and the Municipal Bureau of Finance to make the final decision;

4. The Shanghai Municipal Commission of Commence, in collaboration with the Municipal Bureau of Finance, will inform the commerce authorities and finance departments of enterprises regarding the audit outcome.