Tax Incentives for Software and Integrated Circuit (IC) Industries
[2009-01-06 18:41:40]
1. VAT rebate used in R&D and production expansion will be exempt from CIT.
2. Newly established software production companies will qualify for a tax holiday of two-year exemption and three-year half-rate reduction (2+3 tax holiday) starting from the first profit-making year.
3. Key software production companies listed in the State’s plan will be eligible for a reduced CIT rate at 10% if no other tax exemption is applicable for a given year.
4. Staff training expenses incurred by software production companies are deductible.
5. Software purchased by enterprises is allowed to be depreciated or amortized over a minimum period of two years upon approval by tax authorities.
6. IC desicin companies are treated as software production companies for the purpose of enjoying the above tax incentives.
7. Depreciation period for production equipment of IC production companies is allowed to be shortened to a minimum of 3 years upon approval by tax authorities.
8. IC production companies with total investment exceeding RMB8 billion or which produce ICs with a width of less than 0.25um may be eligible for a reduced CIT rate of 15%; and, if the operation period of the company is more than 15 years, it may also be eligible for a tax holiday of five-year exemption and five-year 50% half-rate reduction?± starting from the first profit-making year.
9. IC production companies which produce ICs with a width of less than 0.8um may be eligible for a 2+3 tax holiday starting from the first profit making year after confirmation. However, this incentive would not apply to companies that have already enjoyed the general 2+3 tax holiday.
10. For the period from 2008 to 2010, where the investor of an IC production or assembly company reinvests its after-tax profits obtained from the IC production or assembly company to increase the capital of that company or establish a new IC production or assembly company which operates for a period of not less than 5 years, it will be eligible for a reinvestment tax refund of 40% of the income tax already paid on the reinvested amount. The reinvestment tax refund would be clawed back if the reinvestment is withdrawn within 5 years.
For the period from 2008 to 2010, where any investor (both domestic and foreign) reinvests its after-tax profits obtained from within China to establish a new IC production or assembly company or software products production company in the Western Region which operates for a period of not less than five years, it will be eligible for a reinvestment tax refund of 80% of the income tax already paid on the reinvested amount. The reinvestment tax refund would be clawed back if the reinvestment is withdrawn within 5 years.
3. Key software production companies listed in the State’s plan will be eligible for a reduced CIT rate at 10% if no other tax exemption is applicable for a given year.
4. Staff training expenses incurred by software production companies are deductible.
5. Software purchased by enterprises is allowed to be depreciated or amortized over a minimum period of two years upon approval by tax authorities.
6. IC desicin companies are treated as software production companies for the purpose of enjoying the above tax incentives.
7. Depreciation period for production equipment of IC production companies is allowed to be shortened to a minimum of 3 years upon approval by tax authorities.
8. IC production companies with total investment exceeding RMB8 billion or which produce ICs with a width of less than 0.25um may be eligible for a reduced CIT rate of 15%; and, if the operation period of the company is more than 15 years, it may also be eligible for a tax holiday of five-year exemption and five-year 50% half-rate reduction?± starting from the first profit-making year.
9. IC production companies which produce ICs with a width of less than 0.8um may be eligible for a 2+3 tax holiday starting from the first profit making year after confirmation. However, this incentive would not apply to companies that have already enjoyed the general 2+3 tax holiday.
10. For the period from 2008 to 2010, where the investor of an IC production or assembly company reinvests its after-tax profits obtained from the IC production or assembly company to increase the capital of that company or establish a new IC production or assembly company which operates for a period of not less than 5 years, it will be eligible for a reinvestment tax refund of 40% of the income tax already paid on the reinvested amount. The reinvestment tax refund would be clawed back if the reinvestment is withdrawn within 5 years.
For the period from 2008 to 2010, where any investor (both domestic and foreign) reinvests its after-tax profits obtained from within China to establish a new IC production or assembly company or software products production company in the Western Region which operates for a period of not less than five years, it will be eligible for a reinvestment tax refund of 80% of the income tax already paid on the reinvested amount. The reinvestment tax refund would be clawed back if the reinvestment is withdrawn within 5 years.
Source: www.xm-n-tax.gov.cn
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