Alipay loses its place on Shanghai’s high tech company list, in potential setback as parent Ant continues restructuring process
- Alipay.com Co failed to appear in the Shanghai government’s latest batch of qualified companies for the high tech company list
- To receive tax benefits companies need to remain on the qualified list in 2022 even if they have been listed in previous years
Alipay, the mobile and online payments service operated by Alibaba Group Holding affiliate Ant Group, has been removed from Shanghai’s high tech company list, in a potential setback for Ant as it continues to undergo a state-directed rectification and restructuring process ahead of reviving an initial public offering.
Alipay.com Co, a major corporate entity of Ant Group, failed to appear in the Shanghai government’s latest batch of qualified companies on the high tech company list, which means it could lose some tax benefits. The news was first reported by Bloomberg and followed by Chinese media outlets.
Shanghai’s high tech company list was first introduced nationwide in 2008 by the Ministry of Science and Technology, the Ministry of Taxation and State Administration of Taxation with the goal of pushing innovation and upgrading the country’s industrial structure.
According to the Shanghai government’s website, qualified enterprises for the high tech list need to meet eight requirements. These include a need for research and development (R&D) employees to account for more than 10 per cent of the total payroll and that R&D expenses need to be more than 3 per cent of sales if the revenue of enterprises exceeds 200 million yuan (US$42.15 million) over three financial years.
In a statement to the Post on Thursday, Ant said Alipay.com Co did not reapply for the list after its original qualification expired. Ant also said that the corporate entity only accounts for a fraction of R&D expenditure at the parent company.
Ant has been ramping up efforts to secure approval for a revived IPO process from regulators. Links between Alibaba and Ant, which were both co-founded by Jack Ma and once very close, have been diluted this year.
Alibaba revealed in July that the top executives of Ant, including chairman and chief executive Eric Jing Xiandong, chief technology officer Ni Xingjun and president of its international business group Angel Zhao Ying, had resigned from its partnership structure. Alibaba also said that the two companies agreed to terminate their data sharing agreement on July 25 and would instead “negotiate the terms of data sharing arrangements on a case-by-case basis and as permitted by applicable laws and regulations”.
Alibaba owns the South China Morning Post.