China to Cut Taxes for Chip, Software Makers

LAI SHASHA & LI NA

(Yicai Global) May 23 — China plans to reduce the income tax imposed on integrated circuit designers and software firms, according to the Ministry of Finance.

Such companies will be exempt from income tax for two years if they became profitable before the end of 2018, the ministry said in a statement yesterday. They will then pay just half of the regular 25 percent tax rate for the following three years.

Experts believe that both domestic and foreign enterprises will benefit equally from the policy and that it will spur industrial development.

An integrated circuit, or microchip, is a set of electronic circuits typically containing a large number of transistors, resistors, capacitors and inductors on a semiconducting wafer, usually silicon. They are widely used in consumer electronics.

Companies set to benefit from the preferential policies include wafer makers, chip designers, packing and testing service providers and material and equipment suppliers.

Editors: Zhang Yushuo, James Boynton