Integrated circuit design companies and software companies will enjoy tax incentives

In order to support the development of integrated circuit design and software industry, the Ministry of Finance and the State Administration of Taxation recently issued a notice clarifying the tax preferential policies for integrated circuit design enterprises and software enterprises.

According to the announcement, integrated circuit design enterprises and software enterprises that are legally established and meet the conditions will enjoy a preferential period starting from the profitable year before December 31, 2018. The first two years will be exempt from corporate income tax, and the third five years will be subject to a 50% reduction in corporate income tax at the statutory tax rate of 25%, and will enjoy it until the expiration of the period.

The announcement clearly states that "meeting the conditions" refers to meeting the conditions stipulated in the "Notice of the Ministry of Finance and the State Administration of Taxation on Further Encouraging the Development of the Software Industry and the Integrated Circuit Industry Enterprise Income Tax Policy" and the "Notice of the Ministry of Finance, the State Administration of Taxation, the Development and Reform Commission, the Ministry of Industry and Information Technology on Relevant Issues of Enterprise Income Tax Preferential Policies for the Software and Integrated Circuit Industry".

Experts say that providing tax incentives based on industries is an internationally accepted practice. The policy introduced this time is a preferential policy that treats domestic and foreign enterprises equally, aiming to attract more domestic and foreign investment to participate and promote the development of the information industry, and activate market vitality.

Information source: Chinese government website