As one of the policies supported by the State Council, Zhongguancun's preferential policy for individual income tax, which is being implemented since Jan 1, 2010, has made steady progress, according to a paper released by the Ministry of Finance the State Administration of Taxation Office and the Ministry of Science and Technology.

The original policy rules that when a technical innovation and venture enterprise in the Zhongguancun Science Park transforms its scientific and technological achievements and awards its related technical personnel in the form of stock, contribution ratio or other equity forms, or if the technical personnel have difficulty in paying tax in a lump sum, the technical personnel in those companies may pay their individual income tax by installments upon approval of the competent tax authority, but the payment period may not exceed five years.

The related technical personnel of an enterprise refers to the important technical personnel and managerial personnel of the company.

The revised policy not only applies to national high-tech enterprises but also small and medium technology-based enterprises. When technical personnel obtains equity award, they can pay their tax after getting dividends or transferring equity instead of paying it immediately. If their enterprises are declared bankrupt and they don't get any income or assets from the awarded equity, they are no longer required to pay their individual income tax.

To be more specific, for example, if a member of the technical personnel obtains an equity reward of 500,000 yuan ($80,000) from his enterprise, he shall pay individual income tax according to the tax law. However, equity is different from cash. The technical personnel may have difficulty in paying tax in a lump sum. So the preferential policy released in 2010 allows him to pay the tax within five years. After five years, even if he doesn't get any income from dividends or equity transfer, he still needs to pay individual income tax in a lump sum. Now the upgraded policy rules that he doesn't need to pay the tax (about 117,000 yuan) before he obtained equity dividends or the equity is transferred, no matter how many years passed by.

The new policy will provide better conditions for innovation and entrepreneurship in Zhongguancun.