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China extends tax incentives to encourage investment in tech startups

Xinhua | August 2, 2023


China announced on Wednesday the extension of favorable taxation policies for venture capital firms and individual angel investors making investment in tech startups.

The policies, first unveiled in 2018, will be extended until the end of 2027, according to a joint statement released by the Ministry of Finance and State Taxation Administration.

The move is aimed at further encouraging entrepreneurship and innovation, according to the statement.

Under the policies, those investors or investment firms that pick up a stake in a tech startup at the seed stage or early stage, and which stay invested for two or more years, can deduct 70 percent of their investment amount from their taxable income.

According to Wednesday's statement, eligible tech startups are defined as those with no more than 300 employees, and with both total assets and annual sales revenue not exceeding 50 million yuan (about 7 million U.S. dollars).