China Introduces CorporateTax Breaks For IT
To encourage innovation in the information technology and industrial technical upgrading, China’s State Administration of Taxation has announced preferential corporate income taxes for producers of software and integrated circuits (IC).
With effect from January 1, 2011, to the end of 2017, companies manufacturing IC lines thinner than 0.8 microns will obtain a corporate income tax exemption for their first two profitable financial years. Those companies will then be taxed at only 50% of China’s corporate income tax rate, currently 25%.
In addition, under certain conditions, corporate tax exemptions and reductions are also to be made available for companies producing IC lines thinner than 0.25 microns and qualified software firms.
Under the same initiative, some IT firms deemed to be of national significance will benefit from a corporate tax rate of only 10%.