China disqualified 58 companies’ eligibility for a significantly reduced corporate tax rate for high- and new-technology enterprises and asked them to pay back taxes at a higher rate, reported Caixin.
The nation is suffering from fiscal revenue loss amid the fallout of the Covid-19 pandemic and a campaign to reduce tax burdens
on enterprises over the past three years. As the government sells bonds to raise funds to fill the fiscal gap, it also needs to close loopholes in the tax system to collect as much revenue as possible.
Under China’s tax law, high- and new-technology enterprises (HNTEs) are eligible for a 15% corporate income tax, compared with the standard 25%. To obtain HNTE status, several criteria need to be satisfied. A company’s core technology should belong to one of the categories outlined in a catalogue of high and new technologies specifically supported by the state.