Shanghai Introduces Tax Incentives to Support Enterprises’ Investment in Basic Research

The General Office of the Shanghai Municipal People’s Government recently issued the Several Measures of Shanghai Municipality to Support Enterprises in Strengthening Basic Research and Enhancing New Momentum for High-Quality Development (the “Measures”), which came into effect on August 1, 2025, and will remain in force until July 31, 2030.

The Measures include tax incentives to support enterprises’ investment in basic research: For enterprises’ expenditures supporting non-profit research institutions, universities, and government-funded natural science foundations for basic research, the actual amount incurred may be deducted before tax when calculating taxable income, with an additional 100% pre-tax deduction allowed. Non-profit research institutions and universities that receive funds for basic research from enterprises, individuals, and other organizations shall be exempt from corporate income tax.

To encourage enterprises to increase investment in basic research and strengthen technological reserves, one-time financial subsidies will be granted to eligible enterprises:

-Enterprises with annual basic research investment of RMB 100 million or more will receive a one-time subsidy of RMB 10 million;

-Enterprises with annual investment between RMB 50 million (inclusive) and RMB 100 million (exclusive) will receive a one-time subsidy of RMB 5 million;

-Enterprises with annual investment between RMB 10 million (inclusive) and RMB 50 million (exclusive) will receive a one-time subsidy of RMB 2 million.