China’s recent tax reduction move will boost the growth of small and micro-businesses and encourage stronger technological innovation, a senior official said.

Seven new tax policies are expected to save the businesses a total of 60 billion yuan (9.45 billion U.S. dollars) per year.

The reduction will act as an incentive for enterprises in upgrading equipment and improving employee training, as well as encouraging research and development efforts.

The seven tax cut measures are:

1.The per-unit value of newly purchased research and development instruments and equipment eligible for the one-time tax deduction will be raised from 1 million to 5 million yuan;

2.The annual taxable income threshold of small and micro enterprises to be eligible for preferential corporate income tax will be raised from RMB 500,000 ($78,957) to RMB 1 million ($157,913);

3.The preclusion of tax deductions for overseas research and development will be abolished;

4.The time limit for the capital loss carryover of high-tech firms and small and medium-sized technological firms will be extended from five to 10 years;

5.All enterprises will have pre-tax deductions for employee training costs raised from 2.5 percent to eight percent of employee salaries and wages;

6.The stamp tax levied on book accounts established by taxpayers for paid-in capital and capital reserves will be halved, and stamp duty on other book accounts will be exempted;

7.The tax incentives enjoyed by venture capital firms and angel investors that sees 70 percent of their investment deducted from taxable income at the seed and early stages of the high-tech startups they finance will be extended nationwide.

Measures one and two will be effective from January 1, 2018 until December 31, 2020. Measures three, four, and five will be effective from January 1, 2018, while measure six will be implemented from May 1, 2018. Measure seven will be implemented from January 1, 2018 for CIT and from July 1, 2018 for personal income tax.