China will optimize its preferential-tax policies for firms engaged in research and development starting from 2016, as it moves to boost innovation and mass entrepreneurship. Starting from Jan. 1, more R&D activities will be covered by the improved policy, further reducing the taxable income of enterprises, according to a statement released after a State Council executive meeting presided over by Premier Li Keqiang on Wednesday.
The structural tax reduction policy will encourage firms to invest more in innovation and startups, and promote industrial upgrading. Costs for part-time researchers, experts' consulting fees and other such charges are set to enjoy the preferential tax policy. It was also decided that taxable income for more venture capital enterprises will be slashed to encourage investment in small and medium high-tech firms, starting from Oct. 1. Innovation and entrepreneurship have the potential to generate more jobs, inspire creativity, promote structural readjustment and facilitate medium-to-high economic growth.
In the face of economic headwinds, China is counting on entrepreneurship and innovation to generate new jobs and improve the skill set of its citizens, thus, warming up the slowing economy. It was also urged that the construction of Shanghai International Financial Center and pilot financial reform measures to be rolled out in the Shanghai Free Trade Zone (FTZ) should both be expedited, as they supported the opening up of China's financial businesses. The convertible amount of the yuan-denominated capital account will be increased, and free-trade accounts in Shanghai FTZ will be given more functions.
In addition, pilot programs to support investment abroad will also be launched, and an integrated supervision system for RMB and foreign currencies will help enhance risk alert and control. Meanwhile, a draft on the nationwide residence permit system, part of the reform of household registration system, which will give more people access to public services, was also approved.
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