Tax to the aid of innovation and entrepreneurship in China

For companies with operations in China hoping to grow revenues by developing enhanced products, processes and services, the Chinese proverb "like the feeding of Peking ducks – all a matter of stuffing" is apt in the context of recent changes to the high and new-technology enterprise (HNTE) programme and 150% super deduction regulations. Of course a business's technical projects need to demonstrate the necessary hallmarks of R&D activity, but a company also needs to diligently prepare the regulatory documentation regarding its 'Peking duck' in order to secure and protect the appropriate benefit.

Monetary policy stimulus strategies implemented since the global financial crisis have largely fallen short of total factor productivity growth targets. In this context, innovation plays a critical part in China's 13th five-year plan (2016-20) to drive the economy and steer the country away from its traditional reliance on mass manufacturing.

So, what is the synergy – or otherwise – of the HNTE and 150% super deduction with respect to China's supply-side reform and five-year plan?

Importantly, the synergies are strong and the timing aligned. Both the HNTE and 150% super deduction support supply-side structural reform economics as they help increase production capability and lower barriers to production. For example, in the steel industry, factors such as pollution, energy consumption, output quality, occupational safety and technology will all benefit from new knowledge and improved processes supported by these incentives. By maintaining (and increasing) R&D benefits, businesses will find it easier to enter the market and invest in initiatives that increase supply, such as innovative goods and services. This will help lower prices and boost consumption across China.

Traditional sectors, such as manufacturing and agriculture, comprise a significant portion of China's GDP. However, China's manufacturing capability is behind other developed countries in terms of technology and efficiency gains. As a result, the five-year plan includes a "Made in China" 10-year initiative, which emphasises value-added production and intelligent manufacturing. The aim is to double R&D expenses in the manufacturing sector, with 40 manufacturing innovation centres to be created, and carbon dioxide emissions to be reduced by 40%. Both the HNTE and 150% super deduction incentives clearly support this broad objective.

'Green' services, products and technologies require the development of new and improved knowledge to fill the existing local and global gap in non-fossil fuel energy conversion and supply. Green technology is another important component of the Chinese government's five-year plan, and such technologies are likely to be eligible under the 150% super deduction programme and enterprises in this sector should also carefully examine their potential eligibility for the HNTE status programme.

Critically, the services sector is a growing component of knowledge-based capital innovation and essential to long-term economic growth, as stressed by the OECD. However, until recently, China's prevailing focus on manufactured exports, combined with barriers to trade and investment in the services sector, has limited the development of the services sector in China. This is another area where the HNTE and 150% super deduction should support the objectives in the five-year plan. A shift away from manufacturing to consumer services requires supply-side support for innovative thinking and entrepreneurship regarding service delivery models and the technologies that enable them. However, as mentioned on later in this article, recent changes to the 150% super deduction restrict some services-oriented companies from claiming this benefit and this negative list restriction is inconsistent with the government's supply-side reform agenda.

Nevertheless, the good news for China is that its investment in education and research has increased markedly over the past decade. As such, China is considered among the top 10 destinations for multinational enterprises (MNEs) to expand foreign direct investment (FDI) in R&D. This is consistent with the National Bureau of Statistics of China's Economic and Social Development Report 2014, which stated that expenditures on R&D activities was worth RMB 1.3 trillion ($192.2 billion) in 2014, up 12.4% over 2013, accounting for 2.09% of GDP.

A recent International Monetary Fund (IMF) fiscal monitor report, entitled Acting Now, Acting Together, highlighted the need for governments to swallow a short-term hit to tax revenue by boosting R&D incentives to stimulate long-term growth. Significantly for China, R&D incentives are particularly critical when access to credit and capital may be restricted. The IMF in its report contends that incentive programmes (like China's 150% super deduction) should be increased to stimulate GDP growth.

IMF economists concluded that a socially efficient correction should reduce the marginal cost of R&D by 50%. In other words, the cost for a company investing in extra R&D should be reduced by 50 cents per dollar. This need for fiscal correction on the supply side takes into account a private rate of return to business R&D, typically ranging between 20% and 30%, plus social rates of return (spill overs) generally estimated to be two to three times the private return.

Based on the IMF's empirical analysis, the Chinese government would do well to consider whether the net savings to companies from the HNTE and 150% super deduction programmes should be increased to enhance GDP growth.

The HNTE rules in China originally came into effect on January 1 2008. Recognised HNTEs enjoy a reduced corporate income tax (CIT) rate of 15% (down from 25%) for three consecutive years.

Since 2008, HNTE policy has generated tax savings to eligible companies, allowing them to reinvest profits into recruitment, R&D and capital assets.

Importantly, new administrative measures for recognition of HNTEs under Guokefahuo (2016) No. 32 were announced in January 2016. The authorities also subsequently announced more specific HNTE guidelines in Guokefahuo (2016) No. 195 (the new guidance).

The new guidance sees change concerning HNTE compliance thresholds, and shows that the government will continue to strengthen its supervision of the HNTE status.

To be eligible as a HNTE, a company must satisfy criteria related to the following key areas:

• Technologies must fall into the encouraged domains;

• Ownership of core proprietary intellectual property (IP) rights;

• Income must be from high/new-tech products (services);

• Expenditure must qualify for R&D relief;

• The headcount of scientific technology staff;

• Innovation ability assessment criteria: scorecard

• The company's age; and

• Safety, quality and environment compliance.

Below we describe the main HNTE changes that impact enterprise compliance compared to the old HNTE provisions.

The new guidance specifies that an enterprise should own the core technological IP required of its main products. The enterprise needs to own the IP in China that technically plays a core role in relation to its main products (services), through independent R&D, assignment, acceptance of a gift, or a merger and acquisition.

The new guidance puts IP into the following categories listed in Table 1.

Table 1
Type I	Type II
• Invention patents (including defence technology) • New plant varieties; • National-level crop varieties • National-level new drugs; • National-level traditional Chinese medicine protection varieties; • Exclusive rights of integrated circuit layout design, etc.	• Utility model patents; • Design patents; • Software copyrights, etc. (excluding trademarks).

Importantly, IP in Type II can only be included in a HNTE application once, i.e. it cannot be used again for HNTE renewal.

The changes in respect of IP and the transformation of research achievements can be seen as part of the government's intention to promote proprietary and industry-leading R&D within HNTEs, with an overarching objective to push China to the technological forefront of the wider industry.

Overall, the assessment quadrants under the old guidance continue in the new guidance, i.e. IP, the ability to transform (capitalise on) the scientific and technological achievements, organisational excellence and enterprise growth. However, unlike the old guidance that only focused on the number of IP, the new guidance requires a more comprehensive assessment of IP when reviewing a company's innovation ability. In addition to the number of IP, the innovation scorecard now requires an assessment of the quality of the IP: technological advancement of the IP and impact on the IP on main products (services); and how the IP was acquired (or source of the IP right).

IP resulting from self-developed R&D activities will generate more points than those through acquisition, merger or donation, etc.

This section includes a number of indicators such as the organisation and management of the company's R&D activities, in-house R&D cost centre, auxiliary accounting for R&D, cooperation with external bodies, and overall R&D competence. The new guidance has added a new requirement on technical staff training as part of the assessment criteria, although this is not detailed.

The new guidance provides more detailed definitions for some key application requirements, including:

• R&D expenses – The new guidance includes a slight adjustment concerning the R&D expense rules. The key change is that the ratio for the upper limit ratio of 'other expenses' has increased from 10% to 20%. This change allows enterprises to include some expenses that may previously have been disregarded because of the lower ratio under the old guidance;

• High-tech products (services) – The new guidance states that high-tech products (services) are those in which the core technology falls under the scope of "areas of advanced technologies strongly supported by the state". Critically, these 'categories' have also changed dramatically so companies must re-evaluate compliance in this regard;

• Main products (services) – This definition refers to high-tech products (services) for which the enterprise owns the IP of the core technology, and the revenue from which accounts for more than 50% of revenue of all high-tech products (services) during the same financial period;

• Total Revenue – This will be based on the total revenue less the non-taxable revenue. Total revenue includes operating revenue, non-operating revenue and investment returns. Both total revenue and non-taxable revenue should be determined according to the CIT Law and CIT Implementation Rules. The old guidelines previously defined revenue from a different perspective, i.e. sales revenue equals product sales revenue and technical services revenue. As such, it may now be more challenging for some enterprises to meet the 60% HNTE revenue as a percentage of total revenue;

• Technical personnel – The new guidance simplifies the concept of technical personnel and defines 'technical personnel' as those who are directly engaged in R&D activities and other relevant technology innovation activities, and/or those who provide management services and technical support for such activities. Such technical personnel would also need to have accumulated working days of more than 183 days per year. Technical personnel includes full time employees, part-time and temporary employees. The new guidance also clarifies the method for calculating technical staff. This will make it easier for some companies to meet the technical personnel requirement; and

• Enterprise growth – The assessment of the growth of total assets has been replaced by the assessment of 'net assets'. The assessment of the growth rate of sales revenue remains unchanged.

The new guidance sets out clear guidelines with respect to annual reporting, re-examination, enterprise name amendments, changes on major issues, cross-city relocation, application errors and violation of the law pertaining to the HNTE status. This is a tighter review policy compared to the old guidance. During the assessment process, auditors may undertake a site visit to review the HNTE eligibility at the company's premises.

The new guidance demonstrates that an expert panel will continue to be utilised for HNTE assessment purposes. The expert appointment system is retained, and financial specialists will be engaged to review income tax and other relevant financial data.

The changes regarding strengthened supervision highlight that the government will undertake a more regular and focused review of all HNTE applications. We note that, in prior years, some regions across China had issues with HNTE compliance. More recently, however, there has been an overall improvement in HNTE compliance across most regions. This is likely to have resulted from better education and understanding of the HNTE regulations by both claimant companies and local authorities. The new guidance seeks to build on this recent improvement and align applicants more closely to the overall policy objectives of the HNTE programme.

Companies should perform a comprehensive self-assessment in the context of the new guidance, and identify potential HNTE compliance risks. Key areas to examine are:

• How the enterprise's IP in China technically plays a core role in relation to its main products (services);

• Ownership of the IP rights, including scope of IP, frequency of use and IP classification into Type I or Type II;

• Nature and quality of the IP and the technological impact of the IP on main products (services) and its technological advancement;

• R&D expenses and determining if additional expenses can now be included in the R&D expense calculation;

• HNTE revenue calculations with respect to high-tech product revenues to check if the relevant revenue threshold target is still achievable;

• HNTE scorecard analysis to determine if the company still achieves the points target; and

• Group enterprises may wish to not only assess a single entity, but consider the R&D activities in the group as a whole, and make necessary arrangements to enhance HNTE compliance.

Given China's continued focus on supervision of the HNTE status, enterprises are encouraged to enhance reporting, substantiation, and record-keeping and thereby improve R&D management systems in case of an audit.

R&D super deductions have long been used to spur and support innovation across the world. China's R&D super deduction fiscal policy offers companies a 150% tax deduction for eligible activities. This provides companies with a reduction in marginal cost of 12.5% for every eligible expense, assuming a CIT rate of 25%, excluding the base 100% tax deduction and assuming the company is paying tax.

To be eligible for the 150% super deduction in China, a company's technological activity must involve new knowledge applied in a creative way, and result in substantially improved product or process/service. This can include improvements to products and technologies in many industry sectors such as financial services (usually software development), IT, logistics, food and beverage, agribusiness, manufacturing, engineering and mining, as well as more typical R&D industries such as pharmaceuticals and automotive. Creative design activities undertaken for obtaining novel and innovative products are also eligible (refer below).

The Ministry of Finance, the State Administration of Taxation (SAT), and Ministry of Science and Technology jointly issued important notices on R&D policy:

• Improvement of the R&D super deduction, Cai Shui (2015) No. 119; and

• SAT Announcement (2015) No. 97 – detailed implementation.

Many companies will benefit from Cai Shui (2015) No. 119 and Announcement 97.

For example, R&D activities and associated expenses are eligible unless they fall within the "negative list" (see below), so this will have a positive impact on most companies. The retrospective three-year claim opportunity will represent a significant chance for companies to extract additional benefits from the 150% super deduction programme for expense incurred from January 1 2016.

Arguably, the scope of eligible activities has expanded to include industrial design and other creative design industries. Another key improvement is the specific reference allowing companies to use auxiliary or supplementary accounts to identify and capture relevant R&D expenses, which also includes references to the eligibility of other relevant support departments such as manufacturing. As always, a key issue will be how companies determine whether projects qualify for the 150% super deduction. This requires case-by-case analysis on an annual basis.

Below is a list that details the key enhancements and restrictions contained in the recent announcements:

• Retrospective three-year claims: companies will be able to deduct previously unclaimed R&D expenses for the preceding three-year period. However, this applies to expenditure incurred from January 1 2016 onwards;

• The encouraged R&D technical 'categories' specified in the original policy will no longer apply. This means that companies will need to satisfy the definition of R&D activities, but will no longer need to match the activity to one of the categories;

• Companies can now use a set of auxiliary or supplementary accounts to capture eligible R&D expenses, rather than capturing all eligible R&D expenses in one special account in the company's existing accounting system. This clarifies the interpretation of the regulations and simplifies the account keeping requirements, and accords with global best practice;

• The scope of eligible R&D activities and R&D expenditures includes additional eligible "other related costs" such as: expert consulting fees, high-and-new technology R&D insurance fees, R&D output related fees (including information retrieval, analysing, discussion, evaluation, assessment, checking and acceptance), IP right related fees (including application, registration and agent), travelling fees, and meeting fees. However, such costs are capped at 10% of total eligible R&D expenses.

• Creative design activities undertaken for obtaining creative, novel and innovative products, will be eligible. This is, arguably, an extension of the existing rules and highlights the government's intention to support design-related activities, and includes:

• industrial design, and model designs;

• designs of building construction (3 star Green Building standard);

• development of multi-media software and animation game software, design and production of digital animation and game; and

• landscape architecture.

• R&D registration requirements will be simplified and certain registration requirements have been relaxed so that registration with the Science and Technology Bureau is no longer required in most jurisdictions. However, 20% of R&D applications will be audited. As such, contemporaneous and post-filing record keeping will be important to manage tax compliance in case the authorities wish to investigate the activities or related expenses. Some local tax bureaus may still require some type of registration formality;

• The term "solely/exclusively" has been removed in respect of depreciation, rental and other relevant expenses regarding R&D devices and equipment, amortisation of intangible assets and development/manufacturing expenses for models and processing equipment. This indicates that a 'pro-rata' allocation of such R&D expenses may apply, e.g. if an asset is used for R&D purposes 50% of the year, then 50% of the depreciation expense may now be allowable in that year;

• Announcement 97 clarifies the definition of each type of R&D related personnel and includes 'supporting' staff but excludes logistics staff. For example, it appears that a project manager or engineering support team member that contributes to the R&D project may be eligible for inclusion as 'technical staff' or 'support staff'. We suggest applicants consider such individuals on a reasonable basis and allocate and record the time at least on a quarterly basis to prove the nexus to the R&D activity. In respect of logistics staff, it is unclear if logistics staff directly involved in the key experimental activities involving substantial improvement to technology can be included, for example, where the logistics team member is directly resolving complex R&D issues of a technical nature, rather than as a 'supporting' team member; and

• Costs for externally engaged R&D personnel are now eligible.

• Negative list as it applies to 'industries'. The circular specifically excludes certain industry sectors from 150% super deduction eligibility, including:

• The tobacco manufacturing industry;

• The accommodation and catering industry;

• The wholesale and retail industry;

• The real estate industry;

• The leasing and commercial service industries;

• The entertainment industry; and

• Other industries as prescribed by the MOF and SAT.

• Companies that fall within the negative list 'industry' sectors will find it difficult, if not impossible, to claim the 150% super deduction. So, even if a company in these sectors is undertaking highly innovative activities, it is likely that such companies and projects will not qualify for the super deduction. For example:

• Catering industry: does this negative list allocation mean that innovative functional food formulas which enhance health and reduce obesity are no longer eligible? Does this mean that innovative manufacturing technology to pack, seal and fill products for longer shelf-life stability will no longer be eligible?

• Retail industry: (1) A large retailer may develop new distribution and logistics software functionality and systems to more efficiently manage the supply chain; and (2) according to the "Category and Code for National Economic Industry Classification", sales through the internet appear to belong to the retail industry – are these activities no longer eligible for companies in negative list industries?

• Real estate industry: A real estate development company may also be involved in innovative construction techniques and related design – does that mean this company cannot claim the super deduction?

This concept of 'industry exclusions' is understandable in the context of China's historical requirement for activities to fall within approved categories. However, given the general trend in China, and globally, towards a services-consumption driven economy, it would be beneficial for the in-charge authorities to reduce the scope of these exclusions. This is because the services sector is a key component of knowledge-based capital innovation, where companies increasingly invest in intangible assets such as software and technology to stay solvent and maintain a competitive edge in the market (as the above project examples demonstrate).

• Negative list as it applies to 'activities'. The circular specifically excludes certain activities from 150% super deduction eligibility. If the activities are not listed below, it is likely the activities will be eligible if there is a direct connection to the R&D project/activity:

• Regular product upgrades;

• Use of R&D results that are publicly available regarding new processes, materials, devices, products, services or knowledge;

• Post-commercialisation support;

• Repeat or simple update of existing products, services, technologies, materials or processes;

• Market research and studies, efficiency research or management studies;

• Industrial (services) processes or regular quality control, testing analysis, or maintenance; and

• Humanities and social sciences related studies.

• Announcement 97 also implements a standard to calculate eligible R&D expenses by stating that if any income or revenue is received by the applicant in the form of R&D scrap, defects, faulty items, trial products, etc. then such income/revenue will be used to reduce or offset the total R&D expenses. This will decrease the total amount of eligible R&D expenses for R&D super deduction. In addition, material costs cannot be included as eligible R&D expenses if the output of R&D activities utilising such materials/parts etc. results in the 'final' product or 'parts of final' products.

• Finally, Circular 119 expanded the scope of R&D expenses by adding a new R&D expense category called "other related expenses" and lists a set of examples mainly concerning supporting R&D activities. This includes expenses relating to: search, analysis, evaluation, demonstration, identification, assessment and acceptance of R&D results, application fees, registration fees and agent fees for intellectual property, etc. However, to control the scope of claimable 'other expenses', Cai Shui (2015) No. 119 places a cap on the maximum allowable 'other' R&D expense amount, which is 10% of the total R&D expense.

Given that 20% of R&D super deduction companies will be audited, it is important that companies ensure that eligible R&D project identification and expense capturing protocols are well established so that your 'Peking duck' can be truly enjoyed. This will both maximise the value of the benefit, and protect the expenditure if questioned by the in-charge authorities.

Cai Shui (2015) No. 119 clarified the position that a separate R&D cost centre is not required to claim the 150% super deduction and this was a positive point of clarification that was very well received by Chinese industry. However, Announcement 97 suggests that companies need to create auxiliary accounts for R&D expenses when the R&D projects are first set up, but this can lead to compliance challenges since some engineers/scientists and finance staff do not always create project specific accounts. This may be the case notwithstanding that such projects are undertaken on a very systematic basis. In this regard, the announcement provides a standard template for auxiliary accounts that will help companies to record R&D related expenses in an 'authority-approved' way to reduce non-conformity risk.

A major factor concerning a country's ability to drive innovation is its capability to undertake the work. When governments encourage R&D investment by companies, this 'innovation capability' increases exponentially. This is a key attraction for local Chinese and foreign companies looking to establish or expand operations in China in the midst of technological change and disruption.

The HNTE and 150% super deduction programmes encourage innovation, help manage China's overcapacity, cut costs, and support urbanisation and mobility. As part of China's supply-side reform agenda, the government ought to consider increasing the net benefits accruing to companies from these programmes and implement 150% super deduction policy enhancements to support China's services-consumption economic development. Furthermore, when R&D incentives operate in conjunction with broader supply-side reforms, such a combination should lead to stronger and sustainable inclusive economic growth and help achieve China's 13th five-year plan policy objectives. In this context, companies with operations in China should examine their incentive compliance obligations to ensure their 'Peking duck' incorporates the appropriate contemporaneous records to protect the claim if audited by the authorities.

Alan Garcia Partner, Tax KPMG China 50th Floor, Plaza 66 1266 Nanjing West Road Shanghai 200040, China Tel: +86 21 2212 2888 Mobile: +86 21 151 2114 0991 alan.garcia@kpmg.com Alan Garcia is a partner, R&D tax, Asia Pacific regional R&D leader & leader, Centre of Excellence, R&D Incentives, China. His ASPAC R&D regional role involves assisting companies to access and understand various R&D incentive programmes around Asia, including China, Singapore, Australia, Malaysia and Thailand. He has 18 years R&D consulting experience with big four firms. In China, Alan focuses on the R&D Super Deduction and HNTE/ATSE. He deals with State Administration of Taxation (SAT)/Ministry of Finance (MOF) regulators regarding interpretation of R&D incentive rules and regulations, and liaises with government regarding issues such as incentive policies and audit defence. Alan specialises in identifying all material R&D activities and associated R&D expenditure. This includes the provision of tailored knowledge transfer workshops and extensive analyses and processing of financial data – including understanding IP location issues, cross-charge/reimbursement across jurisdictions and associated financial risk. Across ASPAC, he has extensive experience in undertaking R&D reviews for global and local companies. In particular, Alan manages high value R&D audits and inland revenue reviews and appeals and provides advice on legal R&D issues, including strategy and R&D planning. Key areas of experience include the following: automotive, process and materials engineering; chemical engineering; banking and finance; information technology; energy and natural resources; manufacturing process, including automation; recycling process development; environmental sustainability projects; pharmaceuticals, and food and beverage development and processing efficiency. Alan also assists companies to identify potential government grant opportunities and preparation of competitive grant and subsidy applications. He has extensive experience in tracking the changing funding priorities of governments across Asia and assists companies to access appropriate funding opportunities, particularly for the innovation or commercialisation of new technologies and/or for projects that deliver environmental benefits. He has a Bachelor of Laws degree, Bachelor of Arts, and is an affiliate of the Institute of Chartered Accountants.

Bin Yang Partner, Tax KPMG China 38th Floor, Teem Tower 208 Tianhe Road Guangzhou 510620, China Tel: +86 20 3813 8605 bin.yang@kpmg.com Bin Yang has 13 years of experience with the Department of Commerce, focusing on inbound investment policy advisory and investment project management. He then joined a multinational retailing company as the head of corporate development, legal and government affairs, and was responsible for providing professional opinion and services on development strategy, operational compliance and government affairs. Bin joined KPMG Guangzhou in 2006. He has extensive experience in corporate compliance and corporate structure advisory. Bin's clients include numerous eminent multinational enterprises, as well as small and medium size companies in retailing, manufacturing, real estate and service industries. Having extensive experience working with the government, Bin has in-depth knowledge with respect to the regulations governing both domestic and overseas companies, as well as corporate structure. With sound understanding in the practical requirements of investment approval and management in major cities in mainland China, he has successfully assisted many overseas companies to establish subsidiaries/branches/representative offices in China. In addition, Bin has led many business and tax planning advisory projects for corporate restructuring, and the subsequent implementation tasks. Bin is the leader of the research and development (R&D) team of KPMG China. He has abundant experience in R&D services, including high and new-technology enterprise (HNTE) assessments, R&D expense super deductions, assisting clients in the development of R&D management systems and defending their HNTE status. As a key contact between KPMG and the government R&D department, Bin has maintained strong relationships and sound communication with related departments and provides advice on policy planning. Bin has an MBA.

Josephine Jiang Partner, Tax KPMG China 8/F, KPMG Tower Oriental Plaza, No. 1 East Chang An Ave. Beijing 100738, China Tel: +86 10 8508 7511 josephine.jiang@kpmg.com Josephine Jiang is KPMG's Beijing-based tax partner, focusing on research and development (R&D) tax, as well as mergers and acquisitions (M&A) and international tax. She has been practising tax for more than 15 years. Josephine has extensive experience in Chinese domestic and international tax. She has served many large multinational enterprises, state-owned enterprises, venture capital companies and private equity firms. She has significant experience in dealing with various tax issues including global tax minimisation, tax efficient financing, tax risk management, and domestic tax issues such as pre- initial public offering (IPO) restructuring. She has worked extensively on M&As including due diligence, designing and implementing complex takeover transactions and reorganisations. Being the R&D tax lead partner in Northern China, Josephine has worked closely with her team to provide R&D tax services to clients across industries. From 2008 to 2009, Josephine spent one year practising international tax in the New York office of another Big 4 firm with a focus on China inbound investments by US multinationals. Josephine also participated in the effort to provide commentary to the China tax authority on their recent international tax and M&A regulations.

William Zhang Partner, Tax KPMG China 50th Floor, Plaza 66 1266 Nanjing West Road Shanghai 200040, China Tel: +86 21 2212 3415 william.zhang@kpmg.com William Zhang is the practice leader for research and development (R&D) tax and for international corporate tax in Central China and is the national tax leader for the auto industry. William has been providing business, tax and legal consultation and planning ideas for various multinational enterprises since 1997. His experience covers a range of areas, from assisting multinational enterprises s in formulating expansion strategies into China, setting up and structuring their business operations in China, fulfilling relevant registration and filing requirements, up to the stage of working out practical solutions to various tax issues and exploring possible tax planning ideas. In particular, William has assisted quite a number of multinational enterprises in industrial markets in, for example, high and new technology enterprise (HNTE) application review assessments, R&D bonus deduction applications and tax planning for restructuring transactions and cross-border fund repatriation arrangements. William was seconded to the international corporate tax group of KPMG's London office for one year, during which he was substantially involved in various international tax projects for European companies. He is a member of the China Institute of Certified Public Accountants and the China Institute of Certified Tax Agents.