Tax exemptions boost revenues of China's software industry in Jan-July 2010

September 2, 2010 7:34 AM EDT

Continuing its rapid growth, software industry in China posted revenue of 723.1 billion yuan ($106 billion) in the first seven months of 2010, up 29 percent year-on-year, said a report from Chinese Ministry of Industry and Information Technology (MIIT) on Wednesday.

In July alone, the industry earned 118.3 billion yuan ($17.3 billion), up by 28.5 percent compared with same period last year, the report said.

Recently, finance ministry of China announced business tax exemption of 5 percent for the outsourcing companies that will extend to the end of 2013 starting from July 1, in a bid to promote growth and compete with India’s dominance in outsourcing industry.

The tax exemptions are applicable to companies offering information technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) in 21 cities in China.

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Posting revenue of 40.7 billion yuan ($5.9 billion), China’s software design and development businesses increased by 78.1 percent on yearly basis, while revenues from information technology consulting services stood at 72.6 billion yuan ($10.6 billion), up 36 percent.

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Occupying 35 percent of total revenues of the industry, revenues from software products increased by 23.5 percent to 251 billion yuan ($36.8 billion).

Software exports touched 13.86 billion in Jan-July of 2010, up by 26.2 percent, according to MIIT figures

Outsourcing services from China’s software industry reached 10.1 billion yuan ($1.49 billion), surging 32.9 percent in the same period.

According to a recent report from KPMG, China has taken lead over India as a destination for outsourcing and shared services for companies in Asia-Pacific region.

China software industry revenues had hit 997 billion yuan ($146 billion) in 2009, up 25.6 percent compared with 2008. Country witnessed a robust growth in its software industry with revenues increasing by 16 times from 2000.

On the other hand, US President Barack Obama recently gave assurance that the America has come back to strong competitiveness and there will no more jobs and industries moving to countries such China, India or Germany.

This article is copyrighted by International Business Times, the business news leader