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Tax cuts for China’s sci-tech SMEs reach 37.5 billion yuan

Updated: May 26,2019 9:13 AM     CGTN

Small and medium-sized enterprises (SMEs) in China’s sci-tech sector have already enjoyed an additional 75 percent tax deduction for research and development (R&D) expenses, with the amount reaching 37.5 billion yuan ($5.4 billion), according to the Ministry of Science and Technology on May 24.

New policies to support company innovation and R&D will soon be put in place, Yang Xianwu, head of the technology application and regional innovation department, added at a press briefing.

Encouraged by the Ministry of Science and Technology, national high-tech zones, technology startup incubators, and university-based tech centers have sprung up to support the development of SMEs over the years.

Enterprises’ R&D investments account for over 70 percent of the country’s total R&D investment, said Wang Zhijun, vice-minister of Industry and Information Technology.

Amid escalating trade tensions with the United States, China is also offering preferential tax treatment available to the chip design and software companies.

In an effort to support the domestic industries, the Ministry of Finance made a statement about the new enterprise income tax policy of China’s integrated circuit (IC) design and software sectors on May 21.

According to the statement, companies in IC design and software industries will be exempt from paying income taxes in the first two years if they became profitable before the end of 2018. During their third to fifth years of operation, the rate remains 12.5 percent.