ANNOUNCEMENT 20 Apr 2012

April 20, 2012 - Two Chinese ministries jointly announced a tax rebate policy that favoured local producers of integrated circuits.

NUMBER OF INTERVENTIONS

2

  • 2 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

PRC Ministry of Finance, State Administration of Taxation, April 20, 2012. Caishui '2012' No. 27 ('Circular 27', i.e., notice regarding CIT policies to boost the development of the software and IC industries; 财税〔2012〕27号 关于进一步鼓励软件产业和集成电路产业发展企业所得税政策的通知)
http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201205/t20120503_648358.html

Inception date: No inception date

Tax or social insurance relief

On the 20th of April 2012, two Chinese ministries* jointly announced a policy granting corporate tax breaks to companies producing integrated circuits (ICs).

Two tiers of tax leniency were announced。

Firstly, any companies producing ICs with a circuit gauge of ≤0.8μm can apply for complete exemption from the tax for their first two years. For the third to fifth year, a half rate of 12.5% would be levied.

Secondly, for companies producing ICs with a circuit gauge of ≤0.25μm or whose investment amount is more than USD (CNY 8bn) who have been operating profitably for 15 years or more, a second scheme is available where the tax will be exempted for the first five years of profit-making, then at the full 25% for the sixth to tenth years, then at 15% for any remaining years up to 2017.

 

*Chinese Ministry of Finance (MOF) and State Administration of Taxation (SAT)

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
N/A
Inception date: No inception date

Local operations

In the announcement released on the 20th of April 2012, the relevant ministries confirmed that to be eligible, at least 60% of the firm's R&D must be carried out in the PRC, as well as being a company that was originally legally established in China.