Stimulate enterprise innovation enthusiasm

1600071-001 Scientific and technological innovation is the core force to promote China’s economic development, this year, many tax incentives are focused on supporting scientific and technological innovation, especially enterprises can enjoy the first three quarters of research and development expenses deducted tax incentives in advance, how is the implementation of this policy?

Wang Daosu said that a major feature of this year’s tax reduction and fee reduction policy is that enterprises can enjoy the additional deduction policy for research and development costs in the first three quarters in advance, and for manufacturing enterprises, the deduction proportion is increased from 75% to 100%.

1600071-001 “Overall, the policy effect has exceeded expectations. Enterprises across the country benefited 1.3 trillion yuan of additional deductions and 333.3 billion yuan of tax cuts in advance, accounting for 77.6 percent of last year’s final settlement, and enterprises enjoyed policy dividends earlier and with greater intensity.” Wang Daoshu said.

First, enterprises enjoy policies in advance, which is conducive to easing financial pressure. In order to encourage scientific and technological innovation and ease the pressure on enterprises’ production and operation funds, the implementation of the policy of enjoying the extra deduction of research and development expenses in advance has reduced the tax payable by enterprises in the current period and increased the available funds by 333.3 billion yuan.

1600071-001 Second, increased policy support will help stimulate innovation. From the point of view of the additional deduction amount of research and development costs, 82.1% of enterprises enjoying preferential treatment have additional deduction of more than 1 million yuan. From the point of view of the average household level, the average R&D investment of enterprises enjoying preferential treatment is 4.565 million yuan, an increase of 13.3% year-on-year according to comparable caliber, showing that the policy has stimulated the innovation enthusiasm of enterprises, and the research and development investment has been enhanced.

Third, the manufacturing industry enjoys double benefits, which is conducive to enhancing the impetus for development. Manufacturing enterprises can not only enjoy the additional deduction policy of research and development expenses in advance, but also increase the proportion of additional deduction from 75% to 100%. The double benefits benefited 186,000 manufacturing enterprises, with additional deductions amounting to 903.6 billion yuan and tax breaks amounting to 225.9 billion yuan, accounting for 57.7% and 67.8% of the total number of preferential households and tax breaks, respectively. Among them, the increase in the proportion of additional deductions has brought about 57.1 billion yuan of tax breaks for manufacturing enterprises, and the effective guidance of policy support for the development of the manufacturing industry has been shown.

Fourth, private enterprises have benefited significantly, which is conducive to enhancing development focus. Among the enterprises that enjoyed the additional deduction policy of R&D expenses in advance, the additional deduction amount of 302,000 private enterprises reached 953.6 billion yuan, and the tax reduction and exemption amount reached 238.4 billion yuan, accounting for 93.5% and 71.5% of the total number of preferential households and the proportion of tax reduction and exemption respectively, which played a positive role in promoting the better development of private enterprises in the stable expectation.

We will continue to increase reinvestment by foreign companies in China

1600071-001 Since the beginning of this year, China’s absorption of foreign investment has achieved continuous growth. How is the implementation of the tax and fee policy of the state in supporting foreign investment?

Meng Yuying, Director of the Department of International Taxation of the State Administration of Taxation, pointed out that the implementation of the reinvestment deferred tax policy specifically for foreign investment, the profits distributed by foreign investors from Chinese domestic resident enterprises are directly used to reinvest in domestic projects, and the withholding income tax is temporarily not paid, effectively easing the financial pressure of foreign-funded enterprises and promoting the continuous growth of foreign-funded enterprises in China.

1600071-001 Meng Yuying introduced that the implementation of this policy has expanded the scope of benefits. In the first three quarters of this year, the country enjoyed 9.61 billion yuan of deferred tax policy on profits reinvested, up 50.38% year on year; Promote dividend reinvestment of 10.05 billion yuan, an increase of 54.6%, and various indicators hit a new high. At the same time, the number of benefiting industries increased. The invested enterprises enjoying preferential policies cover 68 industries, and the coverage of industries has further expanded compared with the first half of the year. More than 30 percent of the reinvestment went to manufacturing industries such as cars, computers, communications and other electronic equipment.

Tax data show that in the first three quarters of this year, foreign-funded enterprises enjoy additional deductions of 264.9 billion yuan, tax relief of 66.2 billion yuan, and the average R&D investment of foreign-funded enterprises is 16.74 million yuan, which is much higher than the average level of other enterprises, which reflects that the technological innovation of foreign-funded enterprises is continuing to increase.

Meng Yuying said that under the comprehensive effect of various measures to “stabilize foreign investment”, including preferential tax policies, in the first three quarters of this year, the number of foreign-funded enterprises in the newly established tax-related market entities was 41,600, an increase of 26.1% over the same period in 2020, and the overall return to the level before the epidemic. The registered capital of key foreign-funded enterprises increased by 3.5% year on year, of which the registered capital of foreign-funded enterprises in high-tech manufacturing industry increased by 5.3% year on year. The investment of foreign enterprises in purchasing equipment increased by 16.9% year-on-year, of which manufacturing purchases accounted for nearly 60%. This shows that foreign investors have more confidence in China’s economic development and the Chinese market has become more attractive to them.