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Taxation China Q&A concerning Integrated Circuit and Software Industry – Preferential Policies on EIT
FAQQ&A concerning Integrated Circuit and Software Industry – Preferential Policies on EIT
| Q: |
If enterprises or projects that meet the provisions of Articles 1 to 4 of the Announcement 45 but do not meet the original policy and have entered the preferential period before 2019 (inclusive), how can they enjoy tax incentives? |
| A: |
If enterprises or projects that meet the provisions of Articles 1 to 4 of the Announcement No.45 but do not meet the original policy can start to calculate the preferential period from the year of profitable or the tax year in which the first operating income is obtained according to the regulations and continue to enjoy the preferential policy in remaining period from 2020 to the expiration date. |
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Q: |
After the implementation of Announcement 45, if enterprises fail to meet the new regulations, can they continue to enjoy the original preferential income tax policies for the integrated circuit and software industries? |
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A: |
For enterprises or projects that meet the original policy conditions and have entered the preferential period before 2019 (inclusive), they can continue to enjoy the original policy until the expiration date from 2020 (inclusive). Enterprises or projects that have not entered the preferential period before 2019 (inclusive) will no longer implement the original policies from 2020 (inclusive). |
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Q: |
For enterprises and projects that have entered the preferential period before 2019 (inclusive), how can they enjoy the preferential benefits if they meet the original policies and Articles 1 to 4 of Announcement 45? |
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A: |
For enterprises or projects that have entered the preferential period before 2019 (inclusive), and meet the original policy conditions and the policy conditions of Announcement 45, they can choose to implement either one. Among them, those who choose to implement the policy of Announcement No. 45 shall enjoy preferential treatment for the remaining period until the expiration date. |
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Q: |
Compared with the original policy, what are the changes in the management of preferential policies in Articles 1 to 4 of Announcement 45? |
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A: |
According to the original policies and regulations, if an enterprise enjoys preferential treatment in the integrated circuit and software industry, the tax authority shall refer it to the development and reform, industry and information departments for verification in accordance with Article 10 of Caishui [2016] No. 49. For the concessions stipulated in Announcement No. 45, not all (enterprises and projects) are required to be transferred for verification, but will adopt two different management methods based on whether the list management is adopted: if the management is carried out by a list, the National Development and Reform Commission and the Ministry of Industry and Information Technology shall provide the Ministry of Finance and the State Administration of Taxation with a list of enterprises and projects that can enjoy preferential treatment in the previous year before the end of March each year; if the list management method is not adopted, the tax authority will still refer the development and reform, industry and information departments for verification in accordance with the provisions of Article 10 of Caishui [2016] No. 49. |
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Q: |
After the Announcement 45 is released and before the relevant list and conditions are announced, how can taxpayers decide and enjoy preferential policies? |
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A: |
After the issuance of Announcement No. 45, taxpayers who enjoy the preferential treatment stipulated in Articles 1 to 4 in the prepayment declaration in the fourth quarter of 2020 (or December), before the relevant list and conditions are announced, can temporarily decide, apply and enjoy by themselves under the original conditions; after the relevant list and conditions are officially announced, taxpayers should follow the regulations when the enterprise income tax is settled and paid in 2020. |
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