Promoting startups | SAIGON GIAI PHONG NEWSPAPER

SGGP 04/08/2023 06:09

China has decided to extend tax policies aimed at facilitating venture capital and private investor funding for technology startups.

Accordingly, tax policies first implemented by the Ministry of Finance and the State Tax Administration in 2018 will be extended until the end of 2027. The decision aims to further encourage the business environment and innovation as the world's second-largest economy recovers from the Covid-19 pandemic.

Specifically, China's Ministry of Finance will exempt value-added tax (VAT) for businesses with monthly sales below 100,000 RMB (US$13,921), and reduce the tax rate on sales revenue to 1% for businesses that have traditionally applied a 3% tax rate on sales revenue. In addition, small businesses and individuals will be exempt from VAT on revenue earned from secured loans or secured bonds issued to rural residents.

China's Ministry of Finance also announced an extension of tax incentives for small-scale startups (with fewer than 300 employees) and annual revenue under 50 million yuan (US$6.9 million). Investors who purchase shares in a seed-stage technology startup and continue investing for two years or more can deduct 70% of their investment from their taxable income. Government ministries and the central bank also pledged more financial support for small businesses.

Economic experts believe that the new policy is a suitable step to alleviate pressure on technology startups. China recognizes that if startups play a role in driving innovation, then the government is an indispensable "facilitator" in this ecosystem. Therefore, emerging startups in China continue to flourish despite the difficult economic situation, limited capital, and supply chain disruptions caused by the Covid-19 pandemic.

According to a report published by Forbes China, in 2022, the country added 74 new unicorns (startups valued at $1 billion or more) out of a total of 330 new unicorns globally.

Source: https://www.sggp.org.vn/thuc-day-khoi-nghiep-post700194.html