Circular on Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries
Circular on Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries
Circular on Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries
Cai Shui [2012] No.27
April 20, 2012
Finance departments (bureaus), local SAT offices and local tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:
Income tax policies to encourage the development of the software industry and the integrated circuit industry are hereby notified as follows pursuant to the spirit of the Enterprise Income Tax Law of the People's Republic of China and its implementing regulations, as well as the Circular of the State Council on Issuing Several Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry (Guo Fa [2011] No.4), to further facilitate technological innovations and the upgrading of industrial structures and promote the development of the information technology industry:
I. Integrated circuit manufacturers that manufacture integrated circuits with a line width of up to 0.8 micrometer shall, subject to accreditation, be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from enterprise income tax ("EIT") in the first and second years and be subject to EIT at half of the statutory rate of 25% in the third to fifth year until the expiration of such period.
II. Integrated circuit manufacturers that manufacture integrated circuits with a line width of up to 0.25 micrometer or with an investment amount of over RMB 8 billion shall, subject to accreditation, be subject to EIT at a reduced rate of 15%, among which, those with an operation period of over 15 years shall be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from EIT in the first to fifth year and be subject to EIT at half of the statutory rate of 25% in the sixth to tenth year until the expiration of such period.
III. Newly established integrated circuit design enterprises and eligible software enterprises within the territory of China shall, subject to accreditation, be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from EIT in the first and second years and be subject to EIT at half of the statutory rate of 25% in the third to fifth year until the expiration of such period.
IV. Key software enterprises and key integrated circuit design enterprises included in the state planning that have not benefited from the preferential treatment of tax exemption in the current year may be subject to EIT at a reduced rate of 10%.
V. The amount of value-added tax ("VAT") refunded immediately upon payment received by eligible software enterprises under the Circular of Ministry of Finance and State Administration of Taxation on the Value-added Tax Policy on Software Products (Cai Shui [2011] No.100) shall be exclusively used by the enterprises for R&D and extended production of software products and be subject to separate accounting, and may be treated as non-taxable income to be deducted from the total income when calculating the taxable income.
VI.
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Cai Shui [2012] No.27
April 20, 2012
Finance departments (bureaus), local SAT offices and local tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:
Income tax policies to encourage the development of the software industry and the integrated circuit industry are hereby notified as follows pursuant to the spirit of the Enterprise Income Tax Law of the People's Republic of China and its implementing regulations, as well as the Circular of the State Council on Issuing Several Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry (Guo Fa [2011] No.4), to further facilitate technological innovations and the upgrading of industrial structures and promote the development of the information technology industry:
I. Integrated circuit manufacturers that manufacture integrated circuits with a line width of up to 0.8 micrometer shall, subject to accreditation, be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from enterprise income tax ("EIT") in the first and second years and be subject to EIT at half of the statutory rate of 25% in the third to fifth year until the expiration of such period.
II. Integrated circuit manufacturers that manufacture integrated circuits with a line width of up to 0.25 micrometer or with an investment amount of over RMB 8 billion shall, subject to accreditation, be subject to EIT at a reduced rate of 15%, among which, those with an operation period of over 15 years shall be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from EIT in the first to fifth year and be subject to EIT at half of the statutory rate of 25% in the sixth to tenth year until the expiration of such period.
III. Newly established integrated circuit design enterprises and eligible software enterprises within the territory of China shall, subject to accreditation, be entitled to a preferential tax period calculated from the profit-making year till December 31, 2017, and shall, during this period, be exempted from EIT in the first and second years and be subject to EIT at half of the statutory rate of 25% in the third to fifth year until the expiration of such period.
IV. Key software enterprises and key integrated circuit design enterprises included in the state planning that have not benefited from the preferential treatment of tax exemption in the current year may be subject to EIT at a reduced rate of 10%.
V. The amount of value-added tax ("VAT") refunded immediately upon payment received by eligible software enterprises under the Circular of Ministry of Finance and State Administration of Taxation on the Value-added Tax Policy on Software Products (Cai Shui [2011] No.100) shall be exclusively used by the enterprises for R&D and extended production of software products and be subject to separate accounting, and may be treated as non-taxable income to be deducted from the total income when calculating the taxable income.
VI.
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