China's Semiconductor and Software Industries to Benefit from New Tax Policy
The country seems determined to accelerate the development of its technology sector.
The State Council of the People's Republic of China has launched (link in Chinese) a series of favorable policies, touching on tax, investment and financing, research and development, export and import, talents, IP, market applications and international cooperation to promote the high-quality development and integration of the integrated circuit (IC) and software industries.
Among other changes, the new taxation policy may well have an instant effect on the nation's business environment.
The incentives vary: IC manufacturers possessing more advanced techniques and a longer history –and enjoy more favorable policies.
For IC design, equipment, material, packaging, testing and software companies encouraged by the state, they enjoy level 3 tax incentives from the year of breaking even.
The key IC design and software enterprises encouraged by the state will be exempted from corporate income tax during the first five years, starting from the break-even point. The corporate income tax will be levied at a reduced rate of 10% within subsequent years.
Within a certain period of time, the state will exempt import tariffs for companies that meet demand on process nodes like the logic circuit and memory manufacturers.