Chinese tax form. Photo: iStock
Chinese tax form. Photo: iStock

The State Council launched seven new tax reduction policies on Wednesday, in the hopes of cutting taxes by more than 60 billion yuan (US$9.48 billion) over the whole year, reported.

Most of the new policies are inclined to encourage companies to increase their R&D efforts. For example, enterprises that newly purchase R&D equipment will be able to enjoy a tax deduction of a maximum of five million yuan, compared to the previous deduction ceiling of one million yuan.

Meanwhile, small and micro enterprises will enjoy a preferential policy for the reduction of corporate income tax, as the annual minimum taxable income will be raised from 500,000 yuan to 1 million yuan.

This means that for small and micro enterprises who report a taxable income of 1 million yuan, the corporate income tax rate is 10%.

Also, enterprises’ overseas R&D expenses are now deductible, with the aim of encouraging companies to use foreign R&D teams to innovate.