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China's software industry picks up on tax breaks

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BEIJING, July 2 (Xinhua) -- China's software industry grew slightly faster in the first five months of this year due to government tax preferences, official figures showed Monday.

The industry's revenues rose 27.2 percent year-on-year to 860.8 billion yuan (136.4 billion U.S. dollars) in the January-May period, the Ministry of Industry and Information Technology said in a statement.

The growth was 1.2 percentage points higher than that in the January-April period, although it was still 1 percentage point slower than that of the same period of last year, the statement said.

In May, revenues increased 30.8 percent year-on-year to 208.8 billion yuan, up 5.6 percentage points from April.

In the first five months, software exports rose 11.5 percent to 13.4 billion U.S. dollars, 1.3 percentage points faster than the growth in the first four months.

Intensifying competition and weak external demand had dragged down the growth of China's software industry before the government in May announced preferential tax policies for software and integrated circuit (IC) enterprises to spur technological innovation and industrial upgrades.

Backdated to Jan. 1, 2011 and effective until Dec. 31, 2017, enterprises that manufacture IC lines thinner than 0.8 microns will be approved for two-year corporate tax exemptions once they make a profit, according to a government statement issued in May.

Companies producing IC lines thinner than 0.25 microns or that have investment exceeding 8 billion yuan will be taxed at a discounted rate of 15 percent, the statement said.

China's current corporate income tax rate is set at 25 percent.

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