Tax incentives to boost scientific and technological innovation and manufacturing development

Tax and fee reduction becomes one of the most important measures for China to promote economic transformation and upgrading, stimulate the vitality of business entities, reduce the burden of business entities, and stabilize market expectations. It is also an important support policy for the advance of a high-quality economy.

Scientific and technological innovation and manufacturing development are vital to high-quality development and new-quality productive forces. Structural tax-and-fee reduction policy focuses onsupporting scientific and technological innovation and developing advanced manufacturing.

Pre-tax deduction for industrial R&D expenses has boosted the enterprises’ profitability according to the data released by the State Taxation Administration (STA). In 2023, enterprises across China declaimed 1.85 trillion yuan of pre-tax deduction for R&D expenses, a year-on-year increase of 13.6%. Their profit margin with pre-tax deduction of R&D expenses was 7.4%, higher than the average level of all enterprises.

Beyond the tax and fee incentives released last year, the taxation authorities will implement structural tax and fee reduction policies this year, aiming to support scientific and technological innovation and the development of the manufacturing industry, and better serve the development of a modernized industrial system.

Source: State Taxation Administration of P.R.C.