74 75 Networking & Communication, Semiconductors, and Integrated Circuits, Intelligent Terminals, Intelligent Sensors, Intelligent Robots, Precision Instruments And Equipment, New Materials, High-End Medical Devices, Biomedicine, Blockchain and Quantum Information, and Cells And Genes, Etc.. In addition, according to the Joint Policy Package of Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, for those research institutes, R&D enterprises, transformation and incubation platforms and talents, that are in the line with the key scientific research fields and directions of the cooperation zone (six major fields: Medical Technology, Big Data and Artificial Intelligence, Robotics, New Materials, Microelectronics, Fintech), they can apply for preferential policies such as relevant scientific research space, financial support and talent facilitation support measures. 2. TAXES According to the Corporate Income Tax Law of the PRC, foreign-invested enterprises established in the PRC are classified as resident enterprises in the PRC and are subject to an corporate income tax rate of 25%, unless they meet the conditions set out in the special tax policy. According to the Hetao Plan, the corporate income tax is levied at a reduced rate of 15% for enterprises in encouraged industries in specific closed areas, and the Ministry of Finance and the State Taxation Administration will formulate a preferential industry catalogue according to applicable procedures. The preferential tax burden is very enticing. In addition, the Hetao Plan also requires the implementation of the individual income tax burden differential subsidy policy in the Guangdong-Hong Kong-Macao Greater Bay Area for overseas (including Hong Kong, Macao and Taiwan) top talents and needed professionals who are eligible., and exempts Hong Kong residents working in Hetao Shenzhen park from the part of their individual income tax burden that exceeds Hong Kong’s tax burden. 3. CIRCULATION OF PRODUCTION MATERIALS For production and research enterprises with cross-border investment, transporting overseas production and research materials to the destination country for investment involves the cost of customs declaration, and there is various tax burden, such as duties, import value-added tax and consumption tax. In order to smooth the path of the upstream and downstream supply of goods for enterprises in Hetao Cooperation Zone, the Hetao Plan stipulates: under the premise of controllable risks, a whitelisting system of industries, institutions and individuals shall be established in customs supervision areas such as Futian Bonded Zone, and differential management strategies for “First- line” area and “Second-line” area shall be employed for the entry and exit of personnel and the flow of goods in the customs supervision areas where specific closed control is exercised. The “First-line” shall be set between the customs supervision area and Hong Kong and shall be subject to port management, whereas the “Second-line” shall be set between the area under customs control and other areas within the customs territory of the People’s Republic of China and shall be subject to channel management. All goods coming into Shenzhen through the “Second-line” shall be liable for the requisite customs duties, import value-added tax and consumption tax in accordance with the applicable regulations on imported goods, with the exception of those goods already subject to taxation at the “First-line”. Dutiable goods involving export tariffs shall also be levied on export tariffs when they enter the customs supervision area through the “Second-line” from Shenzhen. 4. CORPORATE FINANCING Scientific research enterprises usually incur high capital costs and make large investments in research, hence financing is yet another challenge they must confront. In this regard, the Hetao Plan specifically proposes the “innovation on the supervision of cross-border flows of funds related to scientific research”. In terms of fund products, the Hetao Plan encourages Mainland and Hong Kong venture capital investors to jointly set up venture capital funds, is in support of elaborating the advantages of RMB international investment and loan funds and exploring the establishment of crossborder in dual currency of the early-stage seed funds and series of specialized subfunds at Hetao Cooperation Zone. In terms of scientific research funds, the Hetao Plan explicitly allows the scientific research projects to be subsidized by scientific research funds crossing the boundary between Shenzhen and Hong Kong, and encourages Shenzhen government to formulate supporting policies to facilitate the cross-border flows of scientific research-related funds for high-quality enterprises in Hetao Shenzhen Park. In terms of bonds, the Hetao Plan advocates the development of the bond platform of the Guangdong-Hong Kong-Macao Greater Bay Area and the continual optimization of the pilot work of cross-border bond products. 5. POLICIES FOR TALENTS Cross-border investment enterprises invariably involve the arrangement of cross-border flows of talents. Overseas talents are required to apply for work visas, employment permits and residence registration, etc., to stay and work in the destination country. In addition, there are issues in regards to social welfare such as social insurance. For example, according to the “Interim Provisions for the Participation in Social Insurance of Foreigners Employed in China”, foreigners employed by enterprises that are registered legally in China shall participate in basic pension insurance, basic medical CHAPTER 6 An Exploration on Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone From Seven Important Dimensions of Foreign Investment Under the influence of the “One Country, Two Systems” policy and relevant laws and regulations, investors from Hong Kong and Macao usually refer to the relevant laws and regulations on foreign investment when investing in the mainland. Since joining the WTO, China has been dedicated to its WTO obligations, continually enhancing its investment environment and achieving remarkable results in attracting foreign investment. In particular, since the implementation of the Foreign Investment Law in 2020, the organizational form, organizational structure and activity standards of foreign-invested enterprises have been consistent with those of domestic enterprises, and the differences between foreign-invested enterprises and domestic enterprises have been gradually narrowing. However, foreign investment is essentially a form of cross-border transaction. Cross-border investors should still take into account seven dimensions when determining where to invest: encouraged investment industries, taxation, production materials circulation, corporate finance, policies for talents, intellectual property protection and dispute resolution. Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (hereinafter referred to as the “ Hetao Cooperation Zone”) is located in the northern part of Hong Kong Special Administrative Region and centralsouthern part of Shenzhen, straddling the boundary area. Hetao Cooperation Zone is the natural intersection of the northern metropolitan area of Hong Kong and the GuangzhouShenzhen-Hong Kong Science and Technology Innovation Corridor, covering about 3.89 square kilometers. Among them, The Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (hereinafter referred to as “Hetao Shenzhen Park”) covers an area of 3.02 square kilometers, and the planned scope includes Futian Bonded Zone and Huanggang Checkpoint. On August 8, 2023, The State Council released the Plan for the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (hereinafter referred to as “Hetao Plan”), a fundamental document for the development and construction of Hetao Shenzhen Park. The State Council’s plan outlined four key tasks for HETAO COOPERATION ZONE: working with Hong Kong to promote international scientific and technological innovation and to build a world-class scientific and technological platform; establishing industrial pilot bases to advance the new generation of information technology and biomedicine; creating an international mechanism for scientific and technological innovation to facilitate cross-border flows of personnel, capital and data; and constructing a global platform for science and technology cooperation and for strengthening international exchanges and talent training. This essay will discuss the advantages and limitations of investing in Hetao Shenzhen Park from seven dimensions: encouraged investment industries, taxation, production materials circulation, corporate finance, policies for talents, intellectual property protection and dispute resolution. 1. ENCOURAGED INDUSTRIES The Hetao Plan outlines three key industries which include Information Science & Technology, Material Science & Technology, and Life Science & Technology, with special reference to innovative and interrelated fields such as CHAPTER 6
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