China will expand corporate tax rate cuts for high-tech services firms nationwide, in an effort to boost its overall competitiveness.
China’s finance ministry said on Friday that the tax rate for high-tech services firms would be reduced to 15 per cent, effective Jan. 1, 2017, reports Reuters.
The preferential tax rate is the same as the rate the ministry gave to 21 major cities in 2014, as part of its trial programme to boost the overall industry’s competitiveness.
China’s leaders are counting on growth in services and consumption to rebalance their growth model from its heavy reliance on investment and exports. The services sector accounts for over half of the economy.
Firms eligible for the tax cuts range from information technology outsourcing, business process outsourcing to knowledge process outsourcing, the ministry added.
China’s economy has surprised global financial markets and investors with robust growth of nearly 7.0 per cent so far this year, driven by a renaissance in long-ailing “smokestack” industries such as steel.
But under the weight of official measures to cool heated housing prices and a government crackdown on pollution, property and factory output are starting to cool, with analysts expecting China to post slower growth in the fourth quarter.