China’s software industry grew slightly faster in the first five months of this year, boosted by government’s preferential tax policies.

The industry’s revenues rose by 27.2 per cent, year-on-year, to 860.8 billion yuan ($136.4 billion) in the January-May period, the Ministry of Industry and Information Technology said in a statement.

The statement added that the growth was 1.2 percentage points higher than that in the January-April period, although it was still one percentage point slower than that of the same period of last year.

In May, revenues increased by 30.8 per cent, year-on-year, to 208.8 billion yuan, up 5.6 percentage points from April.

The Xinhua news agency reported that in the first five months, software exports rose 11.5 per cent to $13.4 billion, 1.3 percentage points faster than the growth in the first four months.

Intensifying competition and weak external demand had dragged down the growth of China’s software industry, before the government, in May, announced preferential tax policies for software and integrated circuit (IC) enterprises to spur technological innovation and industrial upgrades.

Backdated to January 1, 2011 and effective until Dec 31, 2017, enterprises that manufacture IC lines thinner than 0.8 microns will be approved for two-year corporate tax exemptions once they make a profit, according to a government statement issued in May.

Companies producing IC lines thinner than 0.25 microns or those having investment exceeding eight billion yuan will be taxed at a discounted rate of 15 per cent, the statement said.

China’s current corporate income tax rate is set at 25 per cent.

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