Preferential Tax Policy for Integrated Circuit Manufacturers Clarified

Issuance Date: April 2, 2018 Source: People's Daily

Ministry of Finance, State Administration of Taxation (SAT), National Development and Reform Commission, and Ministry of Industry and Information Technology recently issued the notice that the preferential policy for corporate income tax will come into effect since January 1, 2018 to further support the development of integrated circuit industry.

According to the notice, the integrated circuit manufacturers or projects which invest in the production of integrated circuits with the line width of less than 130 nm since January 1, 2018 and have the operation period for over one decade, can have their corporate income tax exempted for the first and second years, and have half of their corporate income tax collected at the legal tax rate of 25% from the third year to the fifth year until the term of preferential tax treatment expires.

The integrated circuit manufacturers or projects which invest in the production of integrated circuits with the line width of less than 65 nm or make a total investment of more than RMB 15 billion since January 1, 2018 and have the operation period for over 15 years, can have their corporate income tax exempted from the first year to the fifth year, and have half of their corporate income tax collected at the legal tax rate of 25% from the sixth year to the tenth year until the term of preferential tax treatment expires.

The integrated circuit manufacturers which invested in the production of integrated circuits with the line width of less than 0.25 um or has the total investment of more than RMB 8 billion with no profits made before December 31, 2017, and had the operation period for over 15 years, can have their corporate income tax exempted from the first year to the fifth year since the profit-making year, and have half of their corporate income tax collected at the legal tax rate of 25% from the sixth year to the tenth year until the term of preferential tax treatment expires.

The integrated circuit manufacturers which invested in the production of integrated circuits with the line width of less than 0.8 um (including 0.8um) but made no profits before December 31, 2017, can have their corporate income tax exempted for the first and second years since the profit-making year, and have half of their corporate income tax collected at the legal tax rate of 25% from the third year to the fifth year until the term of preferential tax treatment expires.