Tax cut to encourage innovation and research and development

A new policy to further cut businesses' research and development spending is promoted to encourage enterprises to invest more in sci-tech innovation industry and the development of high-end manufacturing.

Shanghai Kindly Medical Instruments Co Ltd in Jiangqiao Town developed three medical instruments last year and has entered the final stage of preparation before entering the market.

"For medical innovation companies, the investment in R&D is relatively high," said general manager Liang Dongke. "In 2021, we invested nearly 100 million yuan (US$15.7 million) in R&D, accounting for more than 20 percent of sales. Only with the support of R&D investment can companies create more innovative products."

According to the new tax policy, all R&D expenses invested by the company can enjoy full tax deductions. In Liang's view, companies can be supplemented with circulating funds the same year, which has greatly encouraged innovative medical device companies since the new policy has been put into practice.

According to the data, more than 1,295 enterprises in the district enjoyed the new policy of additional deduction in the first three quarters of last year, and the total additional deduction amount was 11 billion yuan, which was equivalent to a tax deduction of 2.75 billion yuan.

Among them, more than 100 foreign-invested enterprises have benefitted from the additional deduction policy involving more than 4.1 billion yuan, which is equivalent to over 1 billion yuan of tax relief.