BEIJING -- Chinese authorities on Monday announced a tax cut on the research and development (R&D) expenses of eligible integrated-circuit and machine-tool firms between Jan 1, 2023 and Dec 31, 2027, to spur enterprise-led innovation.

During the period, such costs, if not covered in the income statement as intangible assets, will be deducted before tax based on 120 percent of the actual amount incurred, in addition to the existing rule that such costs will be deducted before tax, according to the announcement.

If the costs have been taken as intangible assets, they will be amortized at 220 percent as intangible asset costs before tax.

The announcement was jointly made by the Ministry of Finance, the State Taxation Administration, the National Reform and Development Commission, and the Ministry of Industry and Information Technology.