China's Tax Incentives Save Shenzhen Tech Firms CNY 4.2 Bn in 1H 2020
A major innovation hub, the southern city will benefit the most from the country's new policies.
The integrated circuit (IC) and software industries are the essential components of Shenzhen's economy. Statistics show that the information technology (IT) industry generated nearly CNY 1.46 trillion in business revenues in 2019.
Several policies that support the future development of IC and software companies have been published over the last few years. For one, in the first half of 2020, Shenzhen-based firms operating within these two verticals enjoyed around CNY 4.2 billion tax waivers in total, the city announced (link in Chinese) on August 6.
The newly released 'Policies to promote high-quality development of the IC and software industry in the new era' emphasizes the importance of the digital economy development. Effective and detailed practices create a friendly tax environment for related companies to thrive. For instance, a more than fifteen-year-old IC manufacturer operating at process nodes below or equal to 28 nanometers can enjoy an income tax removal for ten years.
Shenzhen tax bureau director Mingjun Cao said that his colleagues have started to help local firm owners better understand and take advantage of new policies through both online and offline coaching sessions.
"New policies provide us with fee and tax incentives," said a financing director of Chipsea, a chip manufacturer that plans to go public on China's Star Market. "We feel more confident to progress in a new round of technological revolution. Supporting by the new schemes, Chipsea is now able to invest 20% of its revenue into technology research every year."