In-depth reading of the State Council’s new policy on integrated circuits: who can enjoy tax exemption for ten years, and how can the support be upgraded
In the new era of China, a heavyweight new policy to promote the development of the integrated circuit industry is released.
On August 4, the State Council officially announced the "Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and Software Industry in the New Era" Guofa [2020] No. 8 (hereinafter referred to as "Several Policies" or Document 8).
The "Several Policies" cover eight aspects of policy measures, including finance and taxation, investment and financing, research and development, import and export, talent, intellectual property, market applications, and international cooperation. The "Several Policies" not only continue and inherit the original "Guo Fa [2000] No. 18" and "Guo Fa [2011] No. 4", there are also upgrades in policy strength and coverage, as well as some new era Special policy.
In terms of fiscal and taxation policies, the "Several Policies" clearly stated that integrated circuit production enterprises or projects with a line width of less than 28 nanometers (inclusive) encouraged by the state and an operating period of more than 15 years will be exempted from the first to tenth year. Levy corporate income tax. Compared with previous policy support, it has been further upgraded.
The policy of supporting integrated circuits with line widths less than 65 nanometers (inclusive) in the past has continued.
It is not only an integrated circuit manufacturer. The "Several Policies" clarify that the integrated circuit design, equipment, materials, packaging, testing and software companies encouraged by the state will be exempted from corporate income tax for the first to second years from the profit-making year, and for the third to fifth years The corporate income tax will be levied at a halved rate of 25%.
In addition, the "Several Policies" also propose to vigorously support qualified integrated circuit companies and software companies to go public and raise funds at home and abroad. Encourage and support qualified companies to list and raise funds on the Sci-tech Innovation Board and ChiNext, and smooth the exit channels for the original shareholders of related companies.
Zhu Jing, senior economist at Beijing International Engineering Consulting Co., Ltd. and deputy secretary-general of the Beijing Semiconductor Industry Association, said in an interview with The Paper: “This time the new No. 8 document can be seen as a stronger and more comprehensive one than before. The policy document also continues the preferential policies that enterprises can enjoy regardless of the nature of ownership, which is consistent with our country's consistent advocacy that the development of the integrated circuit industry should strengthen localization while paying more attention to international cooperation and attract foreign investment in China."
Zhu Jing said that the new policies issued by the State Council are very contemporary, including the core technology research through the promotion of the national system, and the promotion of innovation platform construction based on the characteristics of the industry, which are in line with the actual needs of current industrial development. "The introduction of new policies represents the country. The attitude of supporting semiconductors is firm and long-term sustainable. This is more meaningful than the policy itself."
So, what are the upgrades between the latest "Several Policies" (No. 8) issued by the State Council and the No. 4 issued in 2011? The following is a detailed review and interpretation of The Paper's comprehensive expert opinions.
Fiscal policy
【Integrated Circuit Manufacturing Enterprise】
New policy: The integrated circuit production enterprises or projects with an integrated circuit line width less than 28 nanometers (inclusive) encouraged by the state and an operating period of more than 15 years are exempt from corporate income tax from the first to the tenth year.
The integrated circuit production enterprises or projects with an integrated circuit line width less than 65 nanometers (inclusive) encouraged by the state and an operating period of more than 15 years shall be exempted from corporate income tax from the first to the fifth year. The statutory tax rate of% is halved and the corporate income tax is levied.
The integrated circuit manufacturing enterprises or projects with an integrated circuit line width less than 130 nanometers (inclusive) encouraged by the state and an operating period of more than 10 years are exempted from corporate income tax for the first to second years, and 25 for the third to fifth years. The statutory tax rate of% is halved and the corporate income tax is levied. The losses incurred in the tax year of integrated circuit production enterprises with a line width less than 130 nanometers (inclusive) encouraged by the state are allowed to be carried forward to subsequent years, and the longest period for the rollover shall not exceed 10 years.
Old policy: For integrated circuit manufacturing enterprises with integrated circuit line widths less than 0.8 microns (inclusive), after being identified, they will be exempted from corporate income tax from the first year to the second year from the profit-making year. The 25% statutory tax rate is halved and the corporate income tax is levied.
For integrated circuit manufacturing enterprises with integrated circuit line widths less than 0.25 microns or with an investment of more than 8 billion yuan, the enterprise income tax will be levied at a reduced tax rate of 15% after identification. Among them, the business period is more than 15 years, starting from the profit-making year. From the first year to the fifth year, corporate income tax is exempted, and from the sixth to the tenth year, the corporate income tax is levied at a halved rate of 25%.
Interpretation: The preferential power of corporate income tax for integrated circuit-related manufacturing enterprises has been further enhanced. The old policy is "two exemptions, three halves" and five exemptions, five halves. The new policy is that eligible 28-nanometer companies can be exempt from tax for 10 years, 65 nanometers are exempt from tax for 5 years and half for 5 years, and 130 nanometers are exempt for 2 years and 3 years. Halved.
In comparison, the new Document No. 8 fully supports the domestic advanced manufacturing process. Among them, SMIC is expected to become the biggest beneficiary, and it meets the conditions for the company to exist for more than 15 years and 28nm mass production.
At the same time, the threshold for including tax-free concessions has also been raised, and 0.25 micron (250 nanometers), etc., are no longer eligible for concessions.
[IC design, equipment, materials, packaging, testing companies and software companies ]
New policy: The integrated circuit design, equipment, material, packaging, testing companies and software companies encouraged by the state will be exempted from corporate income tax for the first to second years from the profitable year, and 25% for the third to fifth years The statutory tax rate is halved and the corporate income tax is levied.
If it is a qualified key integrated circuit design enterprise and software enterprise, from the profit-making year, the corporate income tax will be exempted from the first to the fifth year, and the corporate income tax will be levied at a reduced rate of 10% for the subsequent years.
Old policy: Newly established integrated circuit design enterprises and qualified software enterprises in China will enjoy the preferential policy of "two exemptions and three halves" for corporate income tax starting from the profit-making year. Imported materials of recognized integrated circuit design companies and qualified software companies that comply with current laws and regulations can enjoy bonded policies.
Interpretation: The equipment, materials, packaging, and testing companies are clearly included in the tax incentive coverage of the two-year tax exemption and three-year halving. The tax exemption of key design and software companies has also been upgraded from "two exemptions and three halves" to five years of tax exemption .
However, Fang Jing, the chief analyst of Cinda Electronics, also pointed out that the new policy of tax exemption refers to the relevant tax reduction and exemption within a few years after the company makes a profit. For A-share listed companies, the tax reduction and exemption may not be of great significance, but it is more beneficial. Primary market companies, "It is very beneficial for companies like SMIC to declare tax relief in the form of a single production line project."
Are imported materials and equipment for personal use exempt from import tariffs
New policy: Within a certain period of time, manufacturers of logic circuits and memory with integrated circuit line widths less than 65 nanometers (inclusive), as well as special process integrated circuit manufacturers (including masks, 8-inch and The above-mentioned silicon wafer production enterprises) import self-use production raw materials, consumables, special building materials for clean rooms, supporting systems and integrated circuit production equipment parts, exempt from import tariffs; compound integrated circuits with integrated circuit width less than 0.5 microns (inclusive) Manufacturers and advanced packaging and testing companies import production raw materials and consumables for their own use, and are exempt from import tariffs.
For a certain period of time, key integrated circuit design companies and software companies encouraged by the state, as well as integrated circuit production companies and advanced packaging and testing companies mentioned in Article (6) import their own equipment, and technology (including software) imported with the equipment in accordance with the contract As well as supporting parts and spare parts, except for the commodities listed in the relevant non-tax-exempt import commodity catalogue, import duties are exempted.
For a certain period of time, importing new equipment for major integrated circuit projects is allowed to pay import value-added tax in installments.
Old policy: The imported materials of recognized integrated circuit design companies and qualified software companies that meet the current laws and regulations can enjoy the bonded policy.
Interpretation: The new policy has significantly greater preference and intensity for import tariffs on imported materials and objects. Not only are imports of various types of raw materials and self-use equipment exempted from import tariffs, but also the import of new equipment for major projects is allowed to pay value-added tax. These efforts far exceed the original bonded policy.
Investment and financing policy
New policies: (9) Strengthen the service and guidance for the construction of major integrated circuit projects, orderly guide and standardize the development order of the integrated circuit industry, do a good job of planning and layout, strengthen risk warnings, and avoid low-level redundant construction.
(10) Encourage and support integrated circuit companies and software companies to strengthen resource integration. Relevant departments of the State Council and local governments must actively support and guide companies’ reorganization and mergers based on market-oriented principles, and no restrictions other than laws, regulations and policies should be set condition.
(11) Make full use of existing national and local government investment funds to support the development of the integrated circuit industry and software industry, encourage social capital to raise funds through multiple channels in accordance with the principles of marketization, set up investment funds, and improve the level of fund marketization.
(12) Encourage local governments to establish loan risk compensation mechanisms, and support integrated circuit companies and software companies to obtain business through intellectual property pledge financing, equity pledge financing, accounts receivable pledge financing, supply chain finance, technology and intellectual property insurance, etc. loan. Give full play to the role of financing guarantee institutions, and actively provide various forms of financing guarantee services for small and micro enterprises in the integrated circuit and software fields.
(13) Encourage commercial financial institutions to further improve financial services, increase support for medium and long-term loans to the integrated circuit industry and software industry, and actively innovate credit products suitable for the development of the integrated circuit industry and software industry. On the premise of sustainability, increase financial support for major projects; guide insurance funds to invest in equity; support bank wealth management companies, insurance, trusts and other non-bank financial institutions to initiate the establishment of specialized asset management products.
(14) Vigorously support qualified integrated circuit companies and software companies to list and raise funds domestically and abroad, speed up the domestic listing review process, and capitalize R&D expenditures that meet the relevant conditions of the Accounting Standards for Business Enterprises. Encourage and support qualified companies to list and raise funds on the Sci-tech Innovation Board and ChiNext, and smooth the exit channels for the original shareholders of related companies. Provide equity financing, equity transfer and other services for integrated circuit companies and software companies at different development stages through different levels of capital markets, expand direct financing channels, and increase the proportion of direct financing.
(15) Encourage qualified integrated circuit companies and software companies to issue corporate bonds, corporate bonds, short-term financing bills and medium-term notes, broaden corporate financing channels, and support companies to raise funds from the bond market through medium and long-term bonds.
Interpretation: In terms of investment and financing policies, Circular 8 has more inherited and upgraded existing policies. Especially in supporting the listing of integrated circuit companies, it is obviously more detailed. It is clearly stated that “strongly support qualified integrated circuit companies and software companies to list and raise funds at home and abroad, speed up the domestic listing review process, and capitalize R&D expenditures that meet the relevant requirements of the Accounting Standards for Business Enterprises.” The Sci-tech Innovation Board and ChiNext Board will be listed for financing, and the exit channels for the original shareholders of related companies will be smoothed.
R&D policy and talent
New policy: (16) Focus on the research and development of key core technologies of high-end chips, integrated circuit equipment and process technology, integrated circuit key materials, integrated circuit design tools, basic software, industrial software, and application software, and constantly explore the conditions for building a socialist market economy New national system for key core technology research. The Ministry of Science and Technology, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other departments have done a good job in the organization and implementation of relevant work, and actively used national key research and development plans and major national science and technology projects to provide support.
(17) In the fields of advanced storage, advanced computing, advanced manufacturing, high-end packaging and testing, key equipment materials, and new-generation semiconductor technology, promote the construction of various innovative platforms in combination with industry characteristics. Ministry of Science and Technology, National Development and Reform Commission, Ministry of Industry and Information Technology and other departments give priority to supporting relevant innovation platforms to implement R&D projects.
Interpretation: The new policy clearly proposes to explore the establishment of a new national system for core technology research, and relevant national ministries and commissions should give priority to supporting innovation platform research and development projects.
The new policy encourages further strengthening of the construction of integrated circuits and software majors in colleges and universities in terms of talent construction, speeds up the promotion of the establishment of integrated circuits, and adjusts curriculum, teaching plans and teaching methods in a timely manner in accordance with the needs of industrial development, and strives to cultivate compound and practical students Of high-level talents.
International cooperation policy
New policies: (36) Deepen global cooperation between the integrated circuit industry and the software industry, and actively create a good environment for international companies to invest and develop in China. Encourage domestic universities and research institutes to strengthen cooperation with overseas high-level universities and research institutions, and encourage international companies to build R&D centers in China. Strengthen the communication and exchanges between domestic industry associations and international industry organizations, support domestic enterprises to cooperate with international enterprises at home and abroad, and deeply participate in the international market division of labor and international standard formulation.
(37) Promote the "Go Global" of the integrated circuit industry and software industry. Facilitate domestic enterprises to jointly build R&D centers overseas, and make better use of international innovation resources to improve the level of industrial development. The National Development and Reform Commission, the Ministry of Commerce and other relevant departments have improved their service levels and created a good environment for enterprises to carry out investment and other cooperation.
Interpretation: The new policy emphasizes the need to continue to deepen global cooperation in the integrated circuit industry and software industry, and actively create a good environment for international companies to invest and develop in China. Encourage domestic universities and research institutes to strengthen cooperation with overseas high-level universities and research institutions, and encourage international companies to build R&D centers in China. Strengthen the communication and exchanges between domestic industry associations and international industry organizations, support domestic enterprises to cooperate with international enterprises at home and abroad, and deeply participate in the international market division of labor and international standard formulation.
It is worth mentioning that Circular 8 also reiterated that all qualified integrated circuit companies (including design, production, packaging, testing, equipment, and materials companies) and software companies established in China, regardless of the nature of ownership, can Enjoy this policy. This policy has been reflected in the 2011 policy, this time it is a detailed reiteration.
"Circular 18 can be regarded as the first wave of the great development of China's integrated circuit industry. Within the first ten years guided by Circular 18, the domestic integrated circuit industry has taken a real industrial path, and in many ways has achieved zero 1. Circular 4 of 2011 basically continued and refined the preferential policies of Circular 18, and increased the state's support for investment and financing of integrated circuit companies. What is more significant in the decade from 2010 to 2020 is In 2014, the "National Integrated Circuit Industry Development Promotion Program" was released, especially the promotion of the establishment of large funds, which has a more obvious boost to industry development. This new No. 8 document can be seen as a stronger one and more comprehensive than before Policy documents.” Zhu Jing commented on the promotion of the development of China’s integration industry by the three documents over the past 20 years.
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