ANNOUNCEMENT 05 Nov 2010In November 2010, the government of China announced a targeted tax change.
NUMBER OF INTERVENTIONS
On 5 November 2010, the Ministry of Finance, National Development and Reform Commission, State Administration of Taxation, Ministry of Science and Technology and Ministry of Commerce jointly issued the "Notice about the Issues Relevant to the Tax Policies on Advanced Technology Service Enterprises" (Caishui '200' No.63).
According to this Notice, a certified advanced technology service enterprise shall pay the enterprise income tax at the reduced tax rate of 15%. More significantly, such enterprises shall be exempted from the business tax on its income from offshore outsourcing services. The differences in the tax treatment for sales at home and abroad constitute a fiscal inducement to export.
This policy shall be implemented in 20 outsourcing service pilot cities of China, i.e. Beijing, Tianjin, Shanghai, Chongqing, Dalian, Shenzhen, Guangzhou, Wuhan, Harbin, Chengdu, Nanjing, Xi'an, Jinan, Hangzhou, Hefei, Nanchang, Changsha, Daqing, Suzhou, Wuxi and Xiamen from July 1, 2010 to December 31, 2013.