Chinese software, IC makers given tax preference

The Chinese government has created preferential tax policies for software and integrated circuit (IC) enterprises to spur technological innovation and industrial upgrading, according to a government statement issued on Thursday.

Backdated to Jan. 1, 2011 and effective until Dec. 31, 2017, enterprises that manufacture IC lines thinner than 0.8 microns will be approved for two-year corporate tax exemptions once they make a profit. They will then be taxed only half of their corporate income for another three years, said a joint statement from the Ministry of Finance and the State Administration of Taxation.

China's current corporate income tax rate is set at 25%.

Those companies producing IC lines thinner than 0.25 microns or with investment exceeding 8 billion yuan (1.27 billion U.S. dollars) will be taxed corporate income according to a discounted rate at 15%.