博文
The Fabricated High-Tech Boom
||
By staff reporter Zhou Qiong and intern reporter Yang Aili
Century Weekly, Caixin Media
08.10.2010 11:17
How tax incentives for high-tech companies have helped forge a massive industry in application processing
In order to promote technological innovation, three government agencies introduced the High-tech Enterprise Certification Management Policy (High-tech Policy) in 2008. The Ministry of Science and Technology (MOST), Ministry of Finance and the State Administration of Taxation jointly introduced a tax incentive policy to companies with a high-tech certification. From the standard 25 percent corporate tax rate, the tax for high-tech companies was slashed to 15 percent.
 |
After the policy took effect, middlemen agencies that collected fees on the new application process sprouted across the country overnight. The number of agencies in Beijing reached 300, the most in the country. The Yangtze and Pearl River Deltas came in second to Beijing. A cottage industry emerged as a result of the policy adjustment, including accounting firms, law firms, intellectual property firms and various consulting firms. These firms offer professional services not only to handle the application process for high-tech companies, but also help fabricate conditions for clients to gain certification.
And along with the arrival of the 10 percent tax reduction was the birth of "false high-tech companies."
An official at the MOST who asked to remain anonymous said, "At least 50 percent of the companies that have already received high-tech certification are not truly qualified. They were certified under falsified materials."
Faked Background
According to the High-tech Policy, to obtain certification, companies must meet six requirements. For example, the company must own the intellectual property of the core technology for its main products or services; more than 30 percent of the company's workforce must hold university degrees, and 10 percent of the employees must work in research and development department; and the company's research and development budget must account for three to six percent of its total sales.
Senior tax lawyer Liu Tianyong told Caixin that since the Corporate Income Tax Law was implemented on January 1, 2008, domestic and foreign companies have lost all room for tax breaks. The High-tech Policy filled this gap, and encouraged companies to become certified. Currently, nearly 20,000 companies have received certification and approximately 70 percent of them achieved it from the help of agencies. Caixin found that several agencies accepted nearly every company that walked through its doors. "If you don't meet the conditions, we'll create the conditions. Whatever you lack, we can help you fix it," said one agency owner.
In Guangzhou, one agency claimed to have connections with the national and local ministries of science and technology. They boasted that since 2008, they have helped more than 10 companies receive certification successfully each year. In a telephone call, the representative at this agency said that intellectual property was the most difficult condition to apply. He added, "The rest is simple. All the other requirements can be adjusted to suit the application." But even for intellectual property, this agency claimed it could source an idea unique enough for qualification. "We can help a company buy a patent. Depending on the situation, it only costs between 10,000 yuan and 100,000 yuan."
False Prosperity
Manipulation of the high-tech enterprise certification is excessively lenient, making room for falsified declarations. This tradition of leniency in the last 20 years has made the total number of high-tech companies and their output value seem unbelievably high.
In 1991, The State Council issued the "Conditions and Rules for National High-tech Industrial Development Zones and High-tech Company Certifications" which stipulated that high-tech companies that set up in high-tech industrial development zones can enjoy beneficial financial, tax and trade policies.
Since then, the government has included high-tech companies and their output value as part of local officials' performance reviews. The same MOST official said, "Some local officials further relax the conditions for entry into high-tech zones in order to achieve better performance. Anybody can get in and benefit from the advantageous policies. But in fact, the number of companies that qualify for high-tech certification would be very few. So everyone has adopted a lenient attitude."
By the end of 2007, the number of high-tech enterprises in China was 56,047 with an output value of 2.21 trillion yuan. Cai Qixiang, former deputy director of the Guangdong Province Science and Technology Committee, said, "Some people are very happy to see the numbers. They say we're about to catch up with the United States. But actually, what many companies do has nothing to do with technology. They're just assemblers. Many of our high-tech companies are not the same as those in the United States."
Even though the latest High-tech Policy set stricter standard on technological research and development investment, it still did not change the situation. Beginning in March of 2009, the Ministry of Finance, National Audit Office and other departments conducted spot tests of 116 high-tech companies in Beijing, Shanghai and elsewhere. Of those, 85 companies – or 73 percent – were found to not meet the conditions. These companies' tax breaks were valued at 3.63 billion yuan.
Rethinking Policy
With so many companies falsifying information to achieve high-tech status, a strict crackdown is developing from the nation's leadership. Currently, some company's high-tech certifications are being revoked, while others will face stricter review this year.
Most companies bought five-year exclusive patents in order to gain the privileges and tax breaks that come with the high-tech status. As soon as they received the certification, they rarely put research findings into production.
The MOST official pointed out that government is unable to classify companies using simple labels and give differential treatment because of a "high-tech" or "non high-tech" tag. He said that the concept of the High-tech Policy was not bad, but the execution has brought a series of negative effects, such as company rankings, interference in a fair competitive environment and disruption of the market order. "Traditional administrative approval system is not only bad for efficiency, but also makes room for corruption and leads companies to the wrong direction."
A president in research and development for Greater China at a multinational company believes that if the government wants to push companies to innovate, it needs to encourage real innovative behavior, regardless of the company's scale, profits and ratio of employees with advanced degrees. He suggests that the Chinese government focus on protecting intellectual property rights and building a fair and transparent competitive environment.
(Translated by PLW)
https://blog.sciencenet.cn/blog-3598-351885.html
上一篇：紫金矿业项目落选国家科技进步奖
下一篇：警方就方舟子遇袭事件表态
