Tax cut to encourage innovation and R&D

Li Huacheng and Tom Qian

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

Shanghai Kindly Medical Instru-ments 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 com-panies, the investment in R&D is relatively high,” said general man-ager Liang Dongke. “In 2021, we invested nearly 100 million yuan (US$15.7 million) in R&D, account-ing 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 com-pany can enjoy full tax deductions. In Liang’s view, companies can be supplemented with circulating funds the same year, which has greatly en-couraged 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 en-joyed 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 deduc-tion policy involving more than 4.1 billion yuan, which is equivalent to over 1 billion yuan of tax relief.