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China Cuts Corporate Tax For Tech Firms

Tuesday, November 14, 2017

China has announced that it will expand corporation income tax breaks to high-tech ventures.

A 15 percent preferential corporate income tax rate has been on offer in 21 cities since 2014 on a pilot basis to encourage investment by tech firms.

The Ministry of Finance on November 2 announced that the regime will be expanded retroactively to January 1, 2017, to include all Mainland firms, providing at least 50 percent of their income comes from a "technologically advanced" services-focused business and less than 35 percent of its income is derived from outsourced activities. At least 50 percent of a company's workforce must be educated to degree level to be eligible.

It also announced deductions for companies for the cost of educating staff members, capped at eight percent of the total wage bill in any tax year, with the deduction able to be carried forward to future years.

To obtain the tax benefit, a company must submit an application to local tax authorities.