Circular of the Ministry of Finance and the State Administration of Taxation on Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries

Circular of the Ministry of Finance and the State Administration of Taxation on Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries

Cai Shui[2002] No.70

October 10, 2002

To all finance departments (bureaus), state tax bureaus and local tax bureaus of provinces, autonomous regions, municipalities directly under the Central Government, municipalities specifically designated in the State Plan, and the finance bureau of Xinjiang Army Corps of Production and Construction:

In order to further encourage the development of software and integrated circuit (IC) industries, this supplementary notice concerning the relevant preferential tax policies is hereby composed as follows upon approval from the State Council and in accordance with relevant provisions as set forth in the existing tax law:

Article 1 Self-made IC products (including monocrystalline silicon wafers) sold by value-added tax (VAT) general taxpayers from January 1, 2002 to the end of 2010, after the VAT has been collected at a 17% rate, shall adhere to the policy of "refund upon collection" the actual VAT load that exceeds 3%, and the tax refunded shall be used by the enterprises in order to expand the production and the study and development of IC products.

Article 2 Production enterprises of IC products whose product line is less than 0.8 micron (including 0.8 micron) wide, after certification, shall adhere to the policy of "two-year exemption and three-year reduced payment" of enterprise income tax.
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