China's National Development and Reform Commission, Ministry of Information Industry, Ministry of Commerce and the State General Administration of Taxation have jointly issued a circular to reduce the tax paid by 152 key software firms in China.

Those 152 firms who did not enjoy preferential tax policies in 2006 are entitled to pay their income tax at the rate of 10% instead of the normal 33%.

These firms include UF Soft, China Software, Beijing Zhongruan International Information Technology Company, Bejing Ruisikangda Technology Development Company, Datang Software Technology Company, Hanwang Technologies Company, Kingdee Software China, Dalian Yuandong Digital Company, Dalian Songxia Communications Software Engineering Company, Dalian Huaxin Computer Technology Company and Neusoft.

A representative from the government department that oversees these changes has told local media that this new preferential taxation rate is designed to encourage and push forward the development of key software companies in China. Foreign technology companies already enjoy very good tax policies, including tax-free status in some parts of China, so this move is meant to level the playing field for all competitors.