• Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/7/2012

China - Tax relief for new Shenzhen service industry zone 

August 7:   The State Council of China officially approved preferential policies to facilitate the development of a special service industry zone in western Shenzhen, in an area located to the east of the Pearl River delta, adjacent to Hong Kong and Macau.

The project is intended to support four modern service industries—finance, modern logistics, information service, and science and technology services—along with other professional service sectors (i.e., financial and legal services, human resources, education, medicine, and telecommunications).

A pilot program announced pursuant to Guohan No. 58 (27 June 2012), provides policies that are “more preferential” than those applied in the Shenzhen special economic zone.

Tax benefits

Among the tax benefits available for qualifying entities operating in the new Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone are:

  • A reduced corporate income tax rate of 15%
  • A deduction for certain employee education expenses
  • An exemption from individual income tax for subsidies provided to certain employees
  • An exemption from business tax for (1) certain international transportation insurance services and (2) income derived from offshore outsourcing services

The new benefits are intended at attracting new and incremental investments to the zone, rather than merely encourage a relocation (e.g., the relocation of certain entities from other areas may not qualify for the corporate income tax incentives).

Read an August report [PDF 410 KB], prepared by the KPMG member firms in Hong Kong and China: State Council approves preferential policies for Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone