China offers tax break to blunt India’s edge in outsourcing

[OhioChick]

Source: Economic Times of India

12 Aug 2010, 0532 hrs IST,PTI

BEIJING: China, keen to end India’s dominance in the outsourcing industry, on Wednesday announced it will not levy operating taxes on offshore service outsourcing business in 21 of its key cities till 2013 to promote growth of the industry. The 5% operating tax exemption will run from July 1 this year until December 31, 2013, the Chinese government said.

The 21 cities covered are Beijing, Tianjin, Dalian, Harbin, Daqing, Shanghai, Nanjing, Suzhou, Wuxi, Hangzhou, Hefei, Nanchang, Xiamen, Ji’nan, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing, Chengdu and Xi’an.

According to a joint statement released by the ministry of finance, the state administration of taxation and ministry of commerce, offshore service outsourcing income refers to service revenue arising from contracts signed with offshore entities for providing information technology outsourcing (ITO), business processing outsourcing (BPO) and knowledge processing outsourcing (KPO) services.

Those already taxed on offshore service outsourcing income since July 1 would be refunded within this year, the official Xinhua news agency quoted the statement as saying. China’s service outsourcing industry posted a 21% year-on-year increase to $23.6 billion in 2009.


Read more: http://economictimes.indiatimes.com/news/international-business/China-offers-tax-break-to-blunt-Indias-edge-in-outsourcing/articleshow/6296584.cms

[DJ13]

1. This illustrates the main difference between us and China

China's government will do everything they can to foster growth in their country.

They arent afraid to see GDP growth at a high single or double digit rate, where our government thinks growth above 3% would ruin our economy.

[w4rma]

2. China wants some trade secrets, too. (nt)