Initiatives proposed in the Shanghai free trade zone will provide tax incentives for foreign companies, which will especially benefit startups.

The FTZ policies published on Friday stipulate that companies registered in the zone can opt to pay income tax in installments over five years. What's more, professionals working for companies in the zone can also pay tax on their stock options in installments.

Walter Tong, managing partner of tax services for Ernst & Young in China, said that the new tax policy will benefit companies in general.