July 27th, 2020 - The Chinese government announced the expansion of an industry-specific support scheme.




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PRC State Council, July 27th, 2020. (国发〔2020〕8号 国务院关于印发新时期促进集成电路产业和软件产业高质量发展若干政策的通知)

Inception date: 27 Jul 2020 | Removal date: open ended

Tax or social insurance relief

On July 27th, 2020, the Chinese State Council released Guofa 2020/8 (hereafter, 'New Policy') - a new edition in a decennial series of policies released by the Chinese government to support the software and integrated circuit (IC) industries through various targeted support instruments. The previous edition, Guofa 2011/4 (hereafter, 'Old Policy') is linked in the 'related acts' section, with full details.

The New Policy explicitly continued the existing support measures, as well as expanding their scope and degree of support. The changes are summarised below.

  • Qualified IC manufacturers manufacturing circuits with gauge of ≤28nm who have been operating for 15 or more years exempt from corporate income tax (CIT) payments for up to ten years. Previously, the exemption had only been applicable for five years.
  • Those with a circuit line gauge of ≤65nm and operating for 15 or more years exempt from CIT for five years, then half rate tax deduction of a halved CIT tax (halved rate is 25%, so half of that again is 12.5%) for the following five years.
  • For firms manufacturing ICs with a circuit gauge of ≤130nm who have been operating for ten or more years, exemption from CIT for two years, then the half-rate half deduction (as above) for three years after this.

The New Policy reiterated the other support measures applicable to the industry, which included import duty exemptions, various accounting leniencies, and other procedural support measures. These are broadly the same as in the Old Policy.

The New Policy was stated to go into effect upon its promulgation. The support instruments contained within top-level policies such as this one are often revealed in more concrete detail when the specific industries tasked with implementing the policies release more focused announcements. In this case, the GTA considers this New Policy implemented unless evidence to the contrary emerges.