“Tax has taken an active role in supporting enterprises’ long-term development, industrial optimization and upgrading,” said Dong Mingzhu, chairwoman and president of Zhuhai-based Gree Electric Appliances in a meeting with the taxation bureau of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, State Taxation Administration recently. As a deputy to the National People's Congress, Dong believes that a good business environment with favorable taxation services will provide companies with the confidence to reinvest.
Last September, China issued a plan for developing the Guangdong-Macao In-depth Cooperation Zone in Hengqin with a package of preferential policies. For example, a preferential corporate income tax rate of 15 percent, lower than the general level of 25 percent, is provided for enterprises conducive to Macao’s diversified economic development.
Later a batch of key projects and companies, including Gree, have been allocated in the Zone. With more than half an year, Gree has become a representative in Hengqin’s manufacturing industry.
Gree's automatic production lines (Photo: Nanfang Daily)
Tax breaks fuel manufacturing upgrading
In Gree’s intelligent equipment factory, industrial robots have taken the place of traditional human labor to complete all the production procedures. According to Dong, the tax breaks enable Gree to keep costs down and prioritize independent key-technology development, thus increasing its global competitiveness.
It is estimated that the headquarters of Gree Electric Appliances is expected to enjoy more than 2.7 billion yuan in tax and fee reductions, 2.1 billion yuan in export tax refunds and 450 million yuan of incremental retained VAT refunds in 2021.
Dong stated that the lower tax burden has invigorated corporate development. In recent years, Gree has concentrated itself on independent research and production of smart equipment such as numerical control machines and industrial devices.
Fine tax services foster better environment for Guangdong-Macao cooperation
In the meeting, Dong received a designated tax service handbook sent by the taxation bureau of the Zone. In view of Gree’s actual situation, the handbook covers preference policy guidelines, tax risk prevention and control, discussion on major and complex tax-related issues, tax credit risk management, corporate designated services and convenient taxation guide. It is one of the services that the local taxation bureau is committed to offer for enterprises settling down in the Zone.
In addition to precise services, preferential tax policies regarding manufacturing enterprises’ research and development are also an encouragement for enterprises to cultivate talent and increase technological innovation ability, Dong said.
In 2021, the deduction rate for manufacturing enterprises’ R&D costs was raised from 75% to 100%. Being a high-tech enterprise, Gree’s headquarters alone can enjoy a combined deduction of R&D costs and a 15% corporate income rate, in which case, the enterprise is predicted to receive a tax deduction of more than 1.5 billion yuan.
Currently, there are over 8,000 R&D personnel in the headquarters of Gree Electric Appliances. In 2020, the enterprise worked together with the Macao University of Science and Technology and establish a joint laboratory for innovative talent cultivation.
Dong added, “we are anticipating the cooperation zone's preferential policy on personal income tax for high-end and scarce talents from within and outside the country. It will be a great benefit for both enterprises and employees."
Author | Abby
Editor | Wing, Nan, Jerry
