May 20, 2020

China expands tax cuts on high-tech firms

2 min
China expands tax cuts on high-tech firms

In a bid to rebalance China’s growth model, the country has expanded lower tax rates for high-tech service companies.

Effective 1 January 2017, the tax rate on high-tech firms will be reduced to 15%, as reported by the Ministry of Finance.

The same as in 2014, the preferential rates matches the one placed on 21 major cities as part of a trial programme to enhance industry competition.

The leaders of the nation are relying on service ad consumption growth in order to reacclimatise their growth model from its strong dependence on investment and exports.

More than half of the economy is contributed by the services sector.


The range of eligible firms for the cut includes information technology outsourcing, business process outsourcing, and knowledge process outsourcing.

Half of firms’ annual revenue will have to be accounted for by revenues from high-tech services business to allow companies to apply for the tax incentives.

Offshore outsourcing business will be required to take up more than 35% of the annual revenue.

China’s growth of nearly 7% so far this year has been considered very impressive by global finance markets and investors.

This growth has been heavily driven my “smokestack” industries, such as steel.

However, property and factory output are slowing, influenced by the government’s aim to counteract pollution.

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