IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

Yes

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Jan 2014 | Removal date: 31 Dec 2017

Tax or social insurance relief

On February 9th, 2015, the Chinese government announced preferntial tax policies for certain firms in the integrated circuit (IC) industry.

The scheme is very similar to one that targeted IC manufacturers; please see related act for more information.

The policy grants a two-year corporate income tax (CIT) exemption, followed by a 50% reduction in the standard CIT rate of 25% for the subsequent five years to eligible firms. The policy begins from the first profitable year before the end of 2017.

Two types of firms are targeted by the policy:

  1. Manufacturers of key materials and equipment required for IC production (but not the producers themselves);
  2. Firms engaging in the packaging and/or testing of ICs.

Requirements for such firms are listed below (numbers for Type 1 given first, then Type 2, where different):

  • Chinese firm established on or after 1 January 2014;
  • At least 40% of employees at least have a bachelors' degree;
  • At least 20% of employees engaged in R&D;
  • Companies must have rights to key technologies needed for their operations;
  • 60% of R&D expenses must be incurred within the PRC;
  • Such expenses must account for 3.5/5% of annual turnover;
  • Revenues from IC-related activities must account for at least 60/30% of total revenues.

The policy came into effect retroactively from the beginning of 2014.

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

449 Other special-purpose machinery & parts
8486 Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9 (C) to this Chapter
848610 Machines and apparatus for the manufacture of boules or wafers
848620 Machines and apparatus for the manufacture of semiconductor devices or of electronic integrated circuits
848630 Machines and apparatus for the manufacture of flat panel displays
848640 Machines and apparatus specified in Note 9 (C) to this Chapter
848690 Parts and accessories

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