China’s New Tax Breaks for Businesses
May 07 2018China has recently announced several tax changes designed to spur business growth. They include:
- Tax breaks worth some CNY 60 billion for small business, including raising the income tax threshold from CNY 500,000 to 1 million, and increasing the immediate write-off for new equipment used for research and development from CNY 1 million to CNY 5 million, retroactive to January 1, 2018.
- Additional tax deductions for overseas R&D spending.
- Doubling to 10 years the period during which high-tech companies can carry capital losses forward.
- Raising the allowable deduction for employee training costs from 2.5% to 8%, and extending it to all companies from just the high-tech sector.
Additionally, the State Council has approved reductions in the VAT rate from 17% to 16% for manufacturing, and from 11% to 10% for construction, transportation, basic telecom services, and farm produce.
Also, the tax rate has recently been cut from 25% to 15% for generic drug companies, and the resources tax on shale gas production has been reduced from 6% to 4.2% through March 31, 2021.
“We must work hard to cut the cost of the real economy, bring out the vitality of all market entities by lifting the discriminatory restrictions and hidden barriers in taxation and other respects, and see that all the incentives … are fully delivered” –President Xi Jinping, in a recent statement.