Asian Tech Press -- Chinese Internet giant Alibaba Group Holding Ltd (BABA: NYSE) warns investors that Beijing will reduce tax breaks for Internet companies, according to the latest report from Bloomberg.

Alibaba warned investors that as Beijing expands its move to take control of the Internet industry, its years-old tax breaks for the sector will begin to diminish, adding billions of dollars in costs for large Chinese companies, the report said.

The country's largest e-commerce company told some investors in a conference call after its earnings release this week that the government would no longer treat some of its businesses as so-called Key Software Enterprises (KSE), a designation that gives qualified companies a preferential 10% tax rate, according to people familiar with the matter.

The operator of Tmall, one of Alibaba’s flagship e-commerce marketplaces, expects an effective tax rate of 20 % for the September quarter, up from 8% a year ago, people familiar with the matter said.

Looking ahead, Alibaba warned that most Internet companies may no longer enjoy the 10% tax rate, they added.