Technologically advanced service enterprise taxes cut

Companies newly accredited as advanced technology-based service enterprises by Guangdong authorities will soon have a corporate tax rate of 15 percent rather than 25 percent, according to an official notice.

Only those engaged in service outsourcing or trade can apply for the preferential treatment, according to the Department of Science & Technology of Guangdong Province.

Eligible businesses are involved in outsourcing information technology, business processes, and knowledge processing; technology R&D, cultural technology, and traditional Chinese medicine.

Prerequisites are that the applicant's service outsourcing or trade volume should account for more than 50 percent of total operating revenue, and offshore business should bring in over 35 percent of annual income. In addition, more than half of the company's employees should have at least a junior college degree.

There are no requirements on the service trade volume for budding small and medium-sized service enterprises.

Zhuhai Service Outsourcing Industry Exchange Center [Photo by Cheng Lin / Zhuhai Daily]

Those service enterprises identified as technologically advanced at provincial level can deduct employee education expenditures from taxable income if that amount is no more than 8 percent of the employee's gross salary. The part exceeding the amount may be carried forward and deducted in the subsequent tax year.

Municipal commerce, financial, taxation, and development-and-reform authorities are offering coordinated services regarding applications under the leadership of the Zhuhai Science, Technology, Industry & Information Technology Bureau.

Zhuhai, home to more than 170 outsourcing service providers, is a provincial demonstration city for the activity, which has grown more than 30 percent for five consecutive years and become a new hotspot for economic cooperation within the Guangdong-Hong Kong-Macao Greater Bay Area.

Data show that in 2017 Zhuhai executed $100 million worth of offshore service outsourcing contracts with Hong Kong and Macao.