Aug. 12 – The Chinese government announced on Wednesday that is was exempting offshore service outsourcing companies from business tax as it looks to grow the country’s IT industry in a bid to compete with other regional outsourcing powers, India and the Philippines.
The tax exemption will cover revenue derived from business process outsourcing, information technology outsourcing, and knowledge process outsourcing services, according to a statement released jointly by the nation’s tax, commerce, and finance ministries.
A report issued by the international professional services firm KPMG last month showed that China has overtaken India as the number one destination for outsourcing and shared services for companies operating in the Asia Pacific region. The KPMG report put China’s outsourcing market at US$20 billion and estimates that it will rise to US$44 billion by 2014.
“Though, at the moment, the country has still not reached the level of maturity seen in India, the growth of China’s outsourcing market is significant,” said Edge Zarrella, global head of KPMG China’s IT advisory unit. “Many Western companies may still see India as their location of choice, but for executive within Asia Pacific the message is clear – China is now leading the way.”
Related Reading
China-India Investment, Trade and Tax Comparison
(complimentary download)
This is fair enough comment as a generalization, however it doesn’t address the issue that the services between China & India differ, especially in language. While servicing the Chinese speaking consumer makes sense for China, English services are preferable for India. We maintain outsourcing (mainly payroll) in both and the two markets are very different in operations and to some extent, clients. – Chris
Incidentally the orange China-India tax comparison to the left (complimentary download) may also be of use to some readers. – Chris