Tax benefits to fuel innovation, growth

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Zhongguancun Science Park, China's answer to Silicon Valley, implemented four policies on Sept 29 to encourage high-tech innovation in the private sector.

The new policies will give a tax cut of up to 15 percent to key companies in the creative industry, said the park's administrative committee.

The park will also reduce the personal income tax on investors in high-tech research and development. The move is intended to further boost the venture capital sector, which in turn will aid more tech startups, according to the committee.

Company income generated by patent transfers will also receive tax benefits.

The government will waive the enterprise tax on patents sold at less than 5 million yuan ($820,000) and the rate on higher values will be cut in half.

The policies were jointly issued by the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation.

Administrators said the new policies will mostly benefit small and mid-sized tech firms, the majority of companies in Zhongguancun, the largest and oldest technology zone in China.

Located in northwest Beijing, Zhongguancun is now home to more than 20,000 startups and 220 listed IT corporations.

The area is also home to the headquarters of international giants such as personal computer maker Lenovo Group and top Chinese search engine Baidu.

Global players including Google, Oracle and Intel also have R&D facilities in Zhongguancun.

In September, the park signed a strategic cooperation agreement with German marketplace organizer Deutsche Borse Group to help more Chinese companies go public on German stock markets including the Frankfurt Stock Exchange.

A total of 23 Chinese companies are now listed on the Frankfurt exchange.

Sun Wenkai, acting district chief of Haidian district, said earlier that Zhongguancun's operations in the district alone aim to generate 1.6 trillion yuan ($260 billion) in revenue by 2015, largely from tech firms whose products and services are set to create jobs and help traditional industries to increase productivity.

The central government has issued a series of plans to lift the technology level in industries including manufacturing, agriculture and telecommunications. Zhongguancun has been selected as a model and engine for the massive industrial transformation.

"Experience from and policies implemented in national innovation demonstration zones such as Zhongguancun Science Park will be summarized and gradually promoted nationwide," said the State Council, the cabinet of China.

Zhongguancun is looking to shift its major business from manufacturing to R&D, said Zhou Weimin, director of the Beijing Investment Promotion Bureau.

At the end of last year, Haidian had 267 listed companies, most of them tech firms.

Feng Jun, founder and CEO of electronics company Aigo Digital Technology, is a first-generation entrepreneur in Zhongguancun.

"The area is a perfect place for Chinese startups to build their muscle," said Feng, adding that with more favorable policies in place, the park have every reason to retain its title as the strongest high-tech industrial cluster in the nation.

 

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