Preferential policies to encourage the development of software and IC industry,
(A)The tax rebate that the software enterprises get after they pay the VAT tax, which is spent in the research and development of software products and expanding reproduction, shall not be regarded as taxable income, thus, shall not be taxed.
(B) China's newly established domestic software companies, once certified, shall be exempt from corporate income tax in the first year and second year after they gain profits. Their corporate income tax shall be reduced by half from the third to fifth year.
(C) Software companies that are identified as key ones by the State, which have not enjoyed the duty-free policies in the year of such identification, shall be able to enjoy a 10% reduction of its corporate income tax.
(D) Software company's costs for training employee shall be exempted from taxation, according to the amount of actual taxable expenditure.
(E) Software purchased by enterprises and institutions that meet the conditions of identification as fixed assets or intangible assets may be accounted in accordance with fixed assets or intangible assets, if approved by the competent tax authority. Their depreciation or amortization life can be appropriately shortened to no less than 2 years.
(F)Integrated circuit design enterprises shall be taxed like a software enterprise. They shall be able to enjoy the above-mentioned corporate income tax policy that software companies enjoy.
(G) Manufacturing equipments of integrated circuit manufacturing enterprises, if proved by competent tax authority, can have a shortened depreciable life no less than 3 years.
(H)Integrated circuit manufacturing enterprises of more than 8 billion yuan registered capital, or with integrated circuit line widths of less than 0.25um, shall enjoy a 15% reduction of corporate income tax. Among these enterprises, those which have operated for more than 15 years, shall be exempt from the corporate income tax from first year to fifth year, and enjoy a 50% reduction of corporate income tax from the sixth to the tenth year, beginning from the year they start to make profit.
(H) Integrated circuit manufacturing enterprises with production line widths of less than 0.8 microns (or of 0.8 microns ), after being certified, shall enjoy the exemption from corporate income tax in the first and second year and a 50% reduction of corporate income tax from the third to fifth year, beginning from the year they make profit.
Companies that have already enjoy the policy of “two years of tax exemption and three years of tax reduction” since their profit-making year, shall not be able to enjoy this policy.
(I)From January 1, 2008 to the end of 2010, investors of IC manufacturing, packaging enterprise that invest their income after corporate income taxation, directly into the same enterprise to increase its registered capital, or use such income to establish other integrated circuit manufacturer or packaging companies, and have operated for no less than five years, shall enjoy a 40% rebate of the amount that has been taxed on their enterprise income tax. Those who withdraw their re-investment capital within 5 years, shall be forced to give back the rebate.
Preferential policies regarding foreign investors' reaping profits from foreign-invested enterprises
Accumulated retained earnings of foreign-invested enterprise that have been allocated to foreign investors prior to January 1, 2008, shall be exempt from corporate income tax; accumulated retained earnings allocated to foreign investors after 2008 and the allocation of additional profits of foreign-invested enterprises to foreign investor in the subsequent years shall be taxed as corporate income.