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China Boosts Integrated Circuit Manufacturers with Raft of Tax Incentives

China’s integrated circuit (IC) manufacturing sector is set to benefit from a range of corporate income tax (CIT) incentives. The move, jointly announced by the Ministry of Finance, the State Administration of Taxation and several other government bodies, takes a two-tier approach to incentivising new entrants to the sector:

  • Enterprises and projects manufacturing ICs with a linewidth of less than 130 nanometres which are newly invested in or established after 1 January 2018 and with a presumed operational period of 10 years or more, are to be CIT-exempt for the first two years, with the said tax levied at half the 25% statutory tax rate through years three to five. 
  • Enterprises and projects manufacturing ICs with a linewidth of less than 65 nanometres which are newly invested in or established after 1 January 2018 and with investment in excess of RMB15 billion and a presumed operational period of 15 years or more, are to be CIT-exempt in years one to five, with the said tax levied at half the 25% statutory tax rate through years six to 10.

Retroactively applied, these measures took effect as of 1 January 2018.

For further details (in Chinese), please visit the following link:

Circular on Issues Concerning Enterprise Income Tax Policies for IC Manufacturers (Cai Shui [2018] No. 27)

Content provided by Picture: HKTDC Research
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