ANNOUNCEMENT 05 Oct 2010
October 5th, 2010 - The Chinese government announced a change to an existing preferential tax policy.
NUMBER OF INTERVENTIONS
PRC State Administration of Taxation, November 9th, 2010. (财税65号 关于技术先进型服务企业有关企业所得税政策问题的通知)
In October 2010, the Chinese government announced it would be expanding the scope of an existing scheme which granted tax reductions to firms designated as 'advanced technology service enterprises' (ATSEs).
The scheme was expanded to include one more city, Xiamen (Amoy), to bring the total up to 21.
It also changed the requirement that 70% of the firm's income must come from an eligible ATSE activity to 50%.
Eligible firms are entitled to a reduction in corporate income tax (CIT) from 25 to 15%; up to 8% of employee education expenses (as a percentage of total employee salary expenses) tax deductible (usually up to 2.5%); and tax exemption on income from offshore service outsourcing.
A slightly updated catalogue of such activities was also included, but the sectors were broadly the same as before.
Please see the related act from 2009 for full information on the eligibility criteria for this scheme.