Recently, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) announced a tax incentive policy for the integrated circuit (IC) design and software enterprises, with the goal of supporting their growth and development. According to the announcement, all lawfully established IC design and software enterprises that meet the requirements may calculate their preferential period starting the profit-making year before December 31^st, 2018. During the first two years of the preferential period, the enterprises will be exempted from corporate income tax, and during the third to fifth years, the corporate income tax at the legal rate of 25% will be reduced by half, lasting until the preferential period ends.

     Additionally, the announcement clarified that the “requirements” that the enterprises must meet are those stated in the Notice by the MOF and SAT on Corporate Income Tax Policies for the IC Design and Software Sectors to Encourage Further Development, and the Notice by the MOF, SAT, and NDRC on Corporate Income Tax Incentive Policy Matters for the IC Design and Software Sectors.

Source: The Legal Daily