the People's Republic of China Ministry of Industry and Information Technology, National Development and Reform Commission, Ministry of Finance, State Administration of Taxation Announcement No. 9 of 2021_Policy Information_Notice Announcement

In accordance with the Notice of the State Council on Printing and Distributing Several Policies for Promoting the High-Quality Development of the Integrated Circuit Industry and Software Industry in the New Era (No. 8 [2020] of the State Council, hereinafter referred to as the "Several Policies") and the relevant requirements of its supporting tax policies, the conditions for integrated circuit design, equipment, materials, packaging and testing enterprises encouraged by the State as mentioned in Article 2 of the "Several Policies" are hereby announced as follows:

1. the integrated circuit design enterprises encouraged by the state as mentioned in the "certain policies" must meet the following conditions at the same time:

(I) enterprises established in China (excluding Hong Kong, Macao and Taiwan) in accordance with the law, engaged in integrated circuit design, electronic design automation (EDA) tool development or intellectual property (IP) nuclear design and have independent legal personality;

The average monthly number of employees with labor contract relationship or labor dispatch and employment relationship in the year of (II) final settlement is not less than 20, of which the average monthly number of employees with bachelor's degree or above accounts for not less than 50% of the total monthly average number of employees of the enterprise, and the average monthly number of research and development personnel accounts for not less than 40% of the total monthly average number of employees of the enterprise;

The proportion of the total annual research and development expenses of the (III) to the total sales (business) income of the enterprise (the sum of the main business income and other business income, the same below) shall not be less than 6%;

The proportion of sales (business) income of integrated circuit design (including EDA tools, IP and design services, the same below) in the annual final settlement and payment of (IV) shall not be less than 60% of the total income of the enterprise, of which the proportion of sales (business) income of independent design shall not be less than 50% of the total income of the enterprise, and the total income of the enterprise shall not be less than (including) 15 million yuan;

The (V) has core key technologies and intellectual property rights belonging to the enterprise, and the enterprise has a total of not less than 8 authorized invention patents, layout design registration, and computer software copyrights related to the design of integrated circuit products;

The (VI) has a development environment and business premises such as software and hardware facilities that are compatible with the design of the integrated circuit, and must use genuine software and hardware tools such as EDA;

No serious breach of trust, major safety, major quality accidents or serious environmental violations occurred in the year of (VII) settlement.

The integrated circuit equipment enterprises encouraged by the State as mentioned in the 2. Certain Policies must also meet the following conditions:

(I) enterprises established in accordance with the law within the territory of China (excluding Hong Kong, Macao and Taiwan) to engage in the research and development and manufacturing of special equipment or key parts and components for integrated circuits and with independent legal personality;

The proportion of the average monthly number of employees with labor contract relationship or labor dispatch and employment relationship and university Junior College or above in the year of final settlement of the (II) to the average monthly total number of employees of the enterprise in the current year shall not be less than 40%, and the proportion of the average monthly number of research and development personnel to the average monthly total number of employees of the enterprise in the current year shall not be less than 20%;

The proportion of the total amount of research and development expenses for integrated circuit equipment or key parts and components in the total sales (business) income of the (III) in the year of final settlement is not less than 5%;

The proportion of the sales revenue of integrated circuit equipment or key parts in the annual final settlement of the (IV) to the total sales (business) income of the enterprise shall not be less than 30%, and the total sales (business) income of the enterprise shall not be less than (including) 15 million yuan;

The (V) has core key technologies and intellectual property rights belonging to the enterprise, and the enterprise has no less than 5 authorized invention patents related to the research and development and manufacturing of integrated circuit equipment or key components;

The (VI) has the basic conditions such as business premises, software and hardware facilities suitable for the production of integrated circuit equipment or key parts and components;

No serious breach of trust, major safety, major quality accidents or serious environmental violations occurred in the year of (VII) settlement.

The integrated circuit material enterprises encouraged by the State as mentioned in the 3. Certain Policies must meet the following conditions at the same time:

(I) enterprises established within the territory of China (excluding Hong Kong, Macao and Taiwan) in accordance with the law to engage in the research and development and production of special materials for integrated circuits and have independent legal personality;

The proportion of the average monthly number of employees with labor contract relationship or labor dispatch and employment relationship and college Junior College or above in the year of final settlement of the (II) to the average monthly total number of employees of the enterprise in the current year shall not be less than 40%, and the proportion of the average monthly number of research and development personnel to the average monthly total number of employees of the enterprise in the current year shall not be less than 15%;

The total amount of research and development expenses for integrated circuit materials in the year of (III) settlement accounts for not less than 5% of the total sales (business) income of the enterprise;

The proportion of the sales revenue of integrated circuit materials to the total sales (business) revenue of the enterprise in the annual final settlement of the (IV) shall not be less than 30%, and the total sales (business) revenue of the enterprise shall not be less than (including) 10 million yuan;

The (VI) has basic conditions such as business premises, software and hardware facilities that are compatible with the production of integrated circuit materials;

No serious breach of trust, major safety, major quality accidents or serious environmental violations occurred in the year of (VII) settlement.

The integrated circuit packaging and testing enterprises encouraged by the state as mentioned in the 4. Certain Policies must meet the following conditions at the same time:

(I) enterprises established in accordance with the law within the territory of China (excluding Hong Kong, Macao and Taiwan) to engage in IC packaging and testing and have independent legal personality;

The proportion of the average monthly number of employees with labor contract relationship or labor dispatch or employment relationship and with university Junior College degree or above in the year of (II) final settlement to the average monthly number of employees of the enterprise in the current year shall not be less than 40%, and the proportion of the average monthly number of research and development personnel to the average monthly number of employees of the enterprise in the current year shall not be less than 15%;

The proportion of the total annual research and development expenses of the (III) to the total sales (business) income of the enterprise shall not be less than 3%;

The proportion of integrated circuit packaging and testing sales (revenue) revenue to the total revenue of the (IV) shall not be less than 60%, and the total revenue of the enterprise shall not be less than (including) 20 million yuan;

The (V) has core key technologies and intellectual property rights belonging to the enterprise, and the enterprise has not less than 5 authorized invention patents and computer software copyrights related to integrated circuit packaging and testing;

The (VI) has the basic conditions such as business premises, software and hardware facilities suitable for the packaging and testing of integrated circuit chips;

No serious breach of trust, major safety, major quality accidents or serious environmental violations occurred in the year of (VII) settlement.

5. the policy caliber of research and development expenses referred to in the enterprise conditions of this announcement, it shall be implemented in accordance with the "Notice of the Ministry of Finance and the State Administration of Taxation on Improving the Policy of Pre-tax Deduction of Research and Development Expenses" (Caishui [2015] No. 119) and the "Notice of the State Administration of Taxation on Issues Concerning the Scope of Pre-tax Deduction of Research and Development Expenses" (State Administration of Taxation Announcement No. 40, 2017).

6. qualified integrated circuit design, equipment, materials, packaging, and testing enterprises shall follow the "Announcement of the State Administration of Taxation on Issuing the Revised" (State Administration of Taxation Announcement No. 23, 2018) to "self-discrimination, declaration and enjoyment, Relevant data are retained for future reference" to enjoy tax benefits. See the annex for the main retained data. After the enterprises enjoying the preferential treatment have completed the annual final settlement, they shall submit the main retained information for future reference to the tax authorities as required, and the tax authorities shall, in accordance with the provisions of Article 10 of No. 49 of the Ministry of Finance and Taxation [2016], refer it to the provincial competent department of industry and information technology for verification.

7. This announcement will be implemented on January 1, 2020, and will be interpreted by the Ministry of Industry and Information Technology in conjunction with the National Development and Reform Commission, the Ministry of Finance, and the State Administration of Taxation.

Attachment:

Integrated circuit design, equipment, materials, packaging, and testing companies encouraged by the state to enjoy preferential corporate income tax policies mainly retain reference materials. pdf