Business · Companies · 9 hrs ago
Chinese tech firms tighten tax controls as rules and audits grow more complex
Chinese technology firms are strengthening their tax controls as they seek tax breaks and expand overseas.
China offers companies deductions for eligible research and development spending, as well as added value-added tax relief for advanced manufacturers.
Companies must document research costs carefully, including staff time, equipment use and how costs are shared between projects.
Poor records or incorrect classifications can lead to back taxes and late-payment charges.
Tax problems can also damage credit ratings, which may affect how customers and lenders assess a company.
Some firms are bringing tax staff into business planning earlier and linking research, production and finance records.
The next step is continued investment in tax systems and oversight as firms pursue the available benefits.
Chinese technology companies are strengthening tax controls as complex rules and tougher scrutiny increase the risk of tax repayments and lower credit ratings.
Companies are combining data from research and development, production and finance teams to document eligible costs and tax benefits.
China offers eligible companies an additional deduction equal to 100% of qualifying research and development costs.
Some advanced manufacturers can also claim an additional credit equal to 5% of eligible input value-added tax until the end of 2027.
Expanding overseas business adds tax challenges, including differing national rules and the need to manage transfer pricing.
- Who
- Chinese technology companies, including Yuanfeng Technology and Tuosida, are tightening tax management.
- What
- They are improving documentation and coordinating tax checks to manage complex rules and secure tax benefits.
- When
- The article was published on 9 November 2026. Tuosida’s eligible R&D projects have increased in recent years.
- Where
- China, with overseas operations also contributing to the tax challenges.
- Why
- Companies face risks including tax repayments and lower credit ratings if they fail to meet requirements or substantiate claims.
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Yuanfeng Technology’s finance staff compiled costs at month-end and then allocated them across projects.
Yuanfeng Technology built a system to record project staff, working hours and equipment use from the start of each project.
Yuanfeng Technology reported about 117 million yuan in eligible R&D costs for additional deductions and received about 7.8 million yuan in additional VAT deductions.
Tuosida said the number of projects eligible for additional R&D deductions had risen by about 30%.
- R&D additional deduction
- 100% of eligible R&D costs can be deducted from taxable income in addition to the actual costs.
- Advanced manufacturing VAT benefit
- Additional deduction of 5% of eligible input VAT; the scheme runs until the end of 2027.
- Yuanfeng eligible R&D costs
- About 117 million yuan last year.
- Yuanfeng VAT benefit
- About 7.8 million yuan last year.
- Tuosida eligible R&D projects
- Number increased by about 30% in recent years.