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China Opts to Maintain Tax Breaks for IC and Software Enterprises

The State Council has resolved to maintain the preferential enterprise income tax policy for the integrated circuit (IC) design and software industries. In line with this, the Ministry of Finance (MOF) and the State Administration of Taxation jointly-issued the following advisory details:

  • Legally-established IC design and software enterprises meeting certain conditions (see below), will continue to be exempt from enterprise income tax in their first and second years of profitability. They will then be permitted to pay said tax at 50% of the statutory rate in years three to five. This preferential period will be deemed to have begun in the first year of profitability prior to 31 December 2018
  • Further details of the “conditions” referred to above are contained in two prior MOF circulars (Cai Shui No. 27 [2012] and Cai Shui No. 49 [2016])

For further details, please access the following links:

Announcement of MOF on Preferential Tax Policies for Circuit Manufacturers and Software Developers (Announcement No. 68 [2019]) (in Chinese)

China Extends Preferential Tax Polices for Circuit Manufacturers and Software Developers

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