Preferential tax policies prop up software development

14:29, February 10, 2011      

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China has introduced new stimulus policies to promote the development of the software and integrated circuit industries.

Software companies will continue to enjoy preferential value-added tax treatment, while new income tax exemptions will be offered to software and integrated circuit companies, China's State Council said in a statement issued on Wednesday.

The new policies also granted tax cuts to manufacturers of integrated circuit. Enterprises of IC products whose product line is less than 0.8 micron (including 0.8 micron) wide will be exempted from corporate income taxes on the first and the second year after reaching profitability, according to the statement.

Taxes will also be halved for such companies from the third to fifth year after reaching profitability.

Makers of IC products that have a product line that is less than 0.25 micron wide or have invested more than 8 billion yuan (1.21 billion U.S. dollars) in production will pay reduced income taxes.

For companies that have operated for more than 15 years, corporate income taxes will be exempted from the first year to the fifth after reaching profitability.

Between the sixth and the tenth year, the firms will pay half of the taxes, the statement said.

The government also encouraged consolidation in the software and IC industries and will provide financial support to technological research and development.

The measures also include greater support for research and development and improving policies to support imports and exports, the statement said.

By People's Daily Online


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