Targeted tax incentives help form a new pattern in the chip and software industry
Our reporter Bao Xing'an
Integrated circuit and software companies received heavy tax cut support. On August 4, the State Council issued the "Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and Software Industry in the New Era". In terms of fiscal and taxation policies, the use of corporate income tax, value-added tax, and import duties reductions and exemptions depends on the development of integrated circuits and software. The standards implement different preferential tax policies.
"The integrated circuit industry and the software industry are a comprehensive manifestation of the national information technology level and play an important role in promoting the integration of industrialization and informatization." Chen Long, deputy director of the Finance and National Governance Research Center of the Chinese Academy of Fiscal Science, told a reporter from the Securities Daily At present, China's integrated circuits and software are highly dependent on the outside world, and some of them are stuck-neck technologies. This fiscal and taxation policy has given great support to the integrated circuit industry and the software industry, which is conducive to supporting the independent innovation of my country's information industry, breaking the external technology blockade, and enhancing global competitiveness.
In May 2019, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on Corporate Income Tax Policies for Integrated Circuit Design and Software Industry" stating that legally established and qualified integrated circuit design companies and software companies will make profits before December 31, 2018 The preferential period is calculated from the first year to the second year, and the corporate income tax is exempted from the first year to the second year. From the third year to the fifth year, the corporate income tax is levied at a halved rate of 25%, and enjoys until the expiry of the term.
Yiqiying Network Technology Co., Ltd., located in Shanghai Pudong Software Park, was established in 2016 and has been profitable since 2018. In 2018 and 2019, the company met the relevant preferential tax policies for software companies, enjoyed the “two exemptions and three halves” of corporate income tax, and exempted corporate income tax of more than 40 million yuan.
"Preliminary estimates show that this preferential policy can save enterprises over 100 million yuan in income tax for five years. We will also invest more of this preferential funds into software technology research and development." Chief Financial Officer of Yiqiying Network Technology Co., Ltd. Huang Dinglan told a reporter from the Securities Daily.
This "Several Policies" lists 8 fiscal and taxation policies. For example, "Integrated circuit production enterprises or projects with integrated circuit line widths less than 28 nanometers (inclusive) and operating periods of more than 15 years are added. Enterprise income tax exemption for the tenth year”, the original policy enjoyed by related enterprises was “five-year tax exemption and five-year halving”, further reducing the tax burden of related enterprises.
Other "integrated circuit manufacturing enterprises or projects with integrated circuit line width less than 65 nanometers (inclusive) and operating period of more than 15 years" "integrated circuit line width less than 130 nanometers (inclusive) and operating period of more than 10 years Production enterprises or projects” still maintain the original income tax policy.
For "general integrated circuit design enterprises", the original related corporate tax rate policy of "two exemptions and three halves" continues to be used. The newly added income tax rate for key integrated circuit design and software companies shall be exempted from corporate income tax for the first to fifth years from the profit-making year, and the corporate income tax will be levied at a reduced rate of 10% for subsequent years.
"This time, the fiscal and taxation policies for the integrated circuit industry and the software industry show the characteristics of large strength and wide scope, and according to the advanced technology and maturity, the difficulty of innovation and the degree of utilization, the supporting policies have been subdivided, giving long-term, Companies with high-tech products and urgent needs will provide greater support." Chen Long said.
Zhang Yiqun, vice chairman of the Performance Management Committee of the Chinese Institute of Finance, told a reporter from the Securities Daily that the country implements different targeted tax preferential policies based on different standards for integrated circuit and software development, which greatly encourages China’s chip and software companies to accelerate their development. Speed up to make up for China’s shortcomings in chips and software, enhance the technological R&D, innovation and application capabilities of Chinese enterprises, thereby promoting the improvement of China’s overall industrial technology capabilities; on the other hand, implementing tax incentives in accordance with the level of technical standards can effectively avoid low Efficient enterprise repeated production and vicious competition are conducive to the concentration of key enterprises and advantageous resources to implement key development and technological breakthroughs, so that chip and software companies can catch up with the international level in the short term.
Zhang Yiqun believes that these fiscal and tax preferential policies will bring about a readjustment of the overall chip and software industry layout, and implement technical standard bottom-line preferential treatment. Enterprises with higher technical standards and stronger technological research and development capabilities will receive greater preferential policies, which can speed up chip software. The survival of the fittest and technological cycle of enterprises promote the innovation and expansion of the entire industry. In the future, chip and software companies will be polarized. The strong position will be further consolidated. The development of chip software companies that master key and high-end technologies will further accelerate. Large-scale chip software companies will emerge as the times require. The competitiveness of China's high-end technology field has a huge boost. (Securities Daily)