Premier Li Keqiang chaired a State Council executive meeting on Oct 21, covering issues of preferential tax policies to support mass entrepreneurship and innovation; reform of the household registration system and financial reforms in the Shanghai Pilot Free Trade Zone (FTZ).

The meeting decided to improve tax deduction policy to encourage enterprises’ research and development efforts. More activities will be eligible for the policy. Enterprises will be allowed to apply a tax deduction over the costs of research and development for the past three years and the review process will be streamlined.

In addition, a preferential income tax policy piloted in innovation demonstration zones will be expanded to the whole country.

Provisional regulation of the residence permit system will be established to advance the people-oriented urbanization and agricultural modernization. The system will improve public services for residents and enable people who have residence permits and accumulate enough household registration credits to acquire settlement permission.

The meeting also approved a package of policies to press ahead with financial reforms in the Shanghai FTZ, including trials to allow qualified individuals to invest at overseas, to gradually improve the convertibility of renminbi under a capital account, promote cross-border use of the currency and to set up international trading platforms for financial assets, such as foreign reserves and securities.