China's State Council recently issued a new tax policy aimed at stimulating growth in the integrated circuit sector. Enterprises manufacturing ICs less than 0.8 microns wide will be exempt from taxation for the first two profit-making years, and will pay only half of the 25% business tax rate for the following 3 years.
Enterprises manufacturing ICs less than 0.25 microns in width, or those with over RMB 8 bln in investment, will pay taxes at a 15% rate. Companies that meet one of the above two conditions, and which have been operating for 15 or more years, will be exempt from taxation for 5 years beginning from their first profit-making year, and will be taxed at half of the 25% rate for another 5 years.
Editor's Note: For more background on this topic, please see "State Council Passes Measures to Support IC Industry" MD 1/13/11 issue.