China to Boost R&D of Manufacturing Industries with Tax Incentives

The State Council decided at its executive meeting on 24 March to raise the ratio of extra tax deductions on the R&D expenditure of manufacturing firms from 75% to 100% starting from 1 January 2021. This means that for every RMB1 million spent on R&D, a company will see RMB2 million deducted from its taxable income. This policy is expected to result in RMB8 billion worth of corporate tax cuts this year.

The meeting also decided to reform the calculation method in the tax reduction of R&D costs and consider adopting preferential tax policies for R&D service providers, innovation firms and business start-ups.

Source: State Council