Legal analysis: Generally speaking, the transfer of patented technology does not need to pay VAT; Value-added tax is a turnover tax based on the value-added amount of goods (including taxable services) generated in the circulation process.

Legal basis: Notice of State Taxation Administration of The People's Republic of China on Issues Concerning the Reduction and Exemption of Enterprise Income Tax on Technology Transfer (Guo Shui Han [2009] No.212).

According to the Enterprise Income Tax Law of People's Republic of China (PRC) (hereinafter referred to as the "Enterprise Income Tax Law") and its implementing regulations and relevant provisions, the relevant issues concerning the reduction or exemption of enterprise income tax on qualified technology transfer income are hereby notified as follows:

1. According to Item (4) of Article 27 of the Enterprise Income Tax Law, the technology transfer that enjoys the preferential treatment of enterprise income tax reduction and exemption shall meet the following conditions:

(1) The subject of technology transfer enjoying preferential treatment is the resident enterprise as stipulated in the Enterprise Income Tax Law;

(2) Technology transfer falls within the scope stipulated by the Ministry of Finance of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China;

(3) domestic technology transfer is recognized by the science and technology department at or above the provincial level;

(four) the transfer of technology to overseas is recognized by the commercial departments at or above the provincial level;

(five) other conditions stipulated by the competent tax authorities in the State Council.