Shandong's incentives for headquarters

Updated: Mar 12, 2019 Print
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Shandong provincial government issued its incentive policy for headquarters to give full play to the headquarters' functions of developing industrial clusters, promoting consumption upgrading, attracting talents and investment, boosting the adjustment of industrial structure, and accelerating the province's conversion of old and new growth drivers.

The policy, which took effect on Sept 5, 2017, will last until Dec 31, 2020.

Definition of headquarters
A headquarters refers to a corporate enterprise that is registered and carries out business operations in Shandong province according to law, and performs management and service functions over its holding companies or branches. There are three types of headquarters: corporate, regional and functional.

The functions of a functional headquarters include one or several of the following: research and development (R&D), logistics, financial settlements, purchasing, sales, data services, and investment and financing.

Identification standards
1. Newly founded enterprises, which want to be identified as a headquarters, have to meet the following requirements at the same time.
1) Finishing business and tax registration in Shandong province, having an independent legal personality, and operating in accordance with the law and in line with the province's industrial policies;
2) Investing or setting up not less than two enterprises outside Shandong, or having no less than two authorized branches outside Shandong;
3) Registered capital reaching 200 million yuan ($29 million) and above;
4) Continuous operation for more than a year;
5) Operating/sales revenue reaching 2 billion yuan or more;
6) Annual tax payment in Shandong province reaching 50 million yuan (excluding customs duties, ship tonnage tax and individual income tax withheld and paid by enterprises).

2. To be a functional headquarters
1) Operating income made from enterprises' business – R&D, logistics, financial settlement, purchasing, sales, data services, and investment and financing – makes up for 50 percent or above of the enterprises' total.
2) The number of employees engaged in the business of R&D, logistics, financial settlement, purchasing, sales, data services, and investment and financing accounts for 50 percent or above of the enterprises' total.
3) Meeting the first and second requirements in the "1" standards
4) Meeting half of the third, fourth, fifth and sixth requirements in the "1" standards

Identification procedures
1. Administrative departments
1) Identification of enterprises as a headquarters will be conducted once a year.
2) Identification of financial headquarters is presided over by the Shandong Provincial Financial Service Office, while that of other kinds of headquarters is mainly done by the Shandong Provincial Department of Commerce.
3) The Shandong Provincial Department of Finance, Shandong Provincial Tax Service, Shandong Provincial Bureau of Statistics, and Shandong Administration for Industry and Commerce will also participate in the process of identification.

2. Application materials
1) Application form signed by corporate legal representative;
2) Copies of business license, certificate of approval or return receipt of registration (only for foreign-invested enterprises);
3) Financial statement and auditing report of the previous year audited by an accounting firm;
4) Authorization certificate issued by the parent company needed for enterprises to be identified as a regional headquarters or a functional headquarters;
5) List of branches or holding companies outside Shandong province, as well as relevant testimonial materials;
6) Duty-paid proof of the previous year;
7) Letter of commitment;
8) Other materials required.

All the materials should be submitted in sextuplicate; the relevant original documents should be submitted for inspection at the same time.

3. Procedures
1) Enterprises hand in their application materials to the district or county-level commercial departments before the end of April.
2) The district or county-level commercial departments conduct primary verification of the materials. Those up to standard will be delivered to the city-level bureau of commerce.
3) The city-level commercial departments will re-check the authenticity of application materials, and then submit a list of enterprises to be identified as a headquarters as well as their application materials to the provincial-level commercial departments before the end of June.
4) The provincial-level commercial departments will check the materials for a third time.
5) The list of enterprises to be identified as a headquarters will be published on the government websites for public review for not less than seven working days.
6) If there is no objection, the list will be officially published.

Shandong's incentives for headquarters
1. For headquarters up to the foresaid standards and set up between Sept 5, 2017 and Dec 31, 2020, the Shandong Provincial Department of Finance will give a one-time grant of 5 million yuan.
2. Preferential policies in talent introduction, taxation, exit and entry, trade, and fund settlement will be made for headquarters.
3. The departments concerned will provide convenient services, including water, electricity, natural gas, communications and other public facilities, for the key construction projects by headquarters.
4. For headquarters that have made outstanding contributions to local or provincial industrial restructuring, employment, and tax revenue, governments at all levels can make supportive and incentive measures.

Supervision and inspection
1. Headquarters that have received the grants should not leave Shandong province or change its nature and functions within five years.
2. Enterprises that cheat to be identified as a headquarters and get the grant have to return the money if found out. Their dishonest behavior will be added to the enterprise credit information file. Those who violate laws and regulations will be dealt with in accordance with relevant laws and regulations.

This English version is only for reference. To learn more, please refer to the authoritative Chinese version.

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