Government Definition of High-Tech to Determine Tax Rate

China Business, 1/13/08

Whether a company will pay 25% or 15% business tax will be decided by a "high-tech enterprise identification" co-issued by the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation. Although the details have not yet been decided, the State Administration of Taxation has confirmed that the identification process will be based on industry segmentation, rather than on specific technologies or product types, as was previously the case. That means that those companies not belonging to "high-tech", or "encouraged" industries will not benefit from favorable taxation policy, and will pay 25% business tax instead of 15%.

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