On 25 April 2018, Chinese Ministry of Finance has declared 7 key measures to support SMEs and innovation. The measures include:

  • Enterprises’ new purchase of R&D equipment worth less than RMB 5 million can be deducted for one time before calculating corporate income tax the same year, effective from January 1, 2018 until December 31, 2020.
  • The annual taxable income threshold of SMEs to be eligible for preferential corporate income tax (CIT) incentives will be raised from RMB 500,000 to RMB 1 million, effective from January 1, 2018 until December 31, 2020.
  • The preclusion of tax deductions for overseas R&D expenses will be abolished, implemented from January 1, 2018.
  • for high-tech enterprises and technology SMEs capital loss carry forward time limit is extended to 10 years from 5 years, implemented from January 1, 2018.
  • The employee education expenditures incurred by the company, if within 8% of the total salaries and wages, is permitted to be deducted before calculating corporate income tax; excesses can be carried forward to the future taxation years for deduction, implemented from January 1, 2018.
  • The stamp duty levied on capital accounts established by taxpayers for paid-in capital and capital reserves will be halved, and an exemption from stamp duty is provided on certain other documents, implemented from May 1, 2018.
  • The deduction for investment companies and angel investors equal to 70% of seed and early-stage investments made in high-tech startups in certain zones are expanded nationwide, implemented from January 1, 2018.