Chinese authorities on Monday announced a tax cut on the research and development expenses of eligible integrated-circuit and machine-tool firms between Jan. 1, 2023 and Dec. 31, 2027, aiming to secure an end-to-end ecosystem for its semiconductor sector.
Having faced trade restrictions and an outright ban by the international community over its alleged copyright infringement, Chinese technology companies like Huawei have successfully ventured into the semiconductor business and produced their own mobile chipsets.
The latest move by the Chinese government is to be non-reliant on the important component that powers nearly every device and electronics including 5G phones to electric vehicles from outside its country.
During the period, China said costs, if not covered in the income statement as intangible assets, will be deducted before tax based on 120 percent of the actual amount incurred, in addition to the existing rule that such costs will be deducted before tax, according to the announcement.
If the costs have been taken as intangible assets, they will be amortized at 220 percent as intangible asset costs before tax.
The announcement was jointly made by the Ministry of Finance, the State Taxation Administration, the National Reform and Development Commission, and the Ministry of Industry and Information Technology.
