IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Jan 2018 | Removal date: open ended

Tax or social insurance relief

In March 2018, the Chinese government announced that a preferential policy for integrated circuit (IC) enterprises started in 2012 would be continued, with some alterations.

For full information on the existing preferential treatments that have been expanded, please see related act.

Changes in the 2018 policy are:

  • Corporate income tax (CIT) exemption for the first two years and a 50% reduction of income taxes for the subsequent three years applicable to firms established on or after January 1st 2018 and who manufacture ICs with a gauge of ≤130nm. Previously, this incentive was only available to firms who produced ICs with a gauge ≤0.8μm.
  • CIT exemption for the first five years and 50% reduction for another five years applicable to firms established on or after January 1st, 2018 and producing ICs with a gauge of ≤65nm OR with a total investment greater than USD 2.38bn (CNY 15bn). Previously, only firms producing ICs with gauges ≤0.25μm OR an investment greater than CNY 8bn were eligible.

The previous policy was also extended for firms established before December 31st, 2018, but are not yet making profit.

The amber classification of this intervention is due to the fact that, while the maximum circuit gauge allowed to qualify for the scheme has been reduced, this reflects the advances made in IC technology since the previous scheme was incepted. The updated numbers have been selected to be proportional to the previous ones in terms of ease of manufacturing. In addition, since the previous policy was also extended for not-yet-profitable firms (as mentioned above).

 

UPDATE: On May 17th, 2019, the State Taxation Administration released Announcement 2019/68, which emphasised the policy regarding firms established before December 31st, 2018.

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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