Policy on the Enterprise Income Tax
1. Foreign enterprises can enjoy preferential tax treatment: “2 items released, 3 items halved” from the year the enterprise starts making profit. ‘2 items released’ means that newly-established enterprises can enjoy an income tax exempt within 2 years of starting normal operation; ‘3 items halved’ means that in the next three years, the income tax will only be half of the normal 33 percent.
2. As to the outstanding software enterprises within the layout of State planning, if the captioned preferential policy in Article 1 is not ideal, the income tax rate shall be at 10 percent (normally 33 percent).
3. As to the newly established enterprises, they can get a tax refund for the income tax levied in the first two years from the same-level fiscal department, and with half of the income tax refunds in the next three years. After the preferential period, if export value reached 70 percent of the total production value, income tax rate will be decreased to 10 percent (normally 33 percent).
4. If the enterprise belongs to a newly established software enterprises and/or hi-tech enterprises, within the hi-tech development zones certified by the State Council, enterprises can enjoy additional preferential tax treatment. In the preferential period, the rate of the income tax can be halved based on the 15 percent. After the expiration of the tax preferential period, the rate of the income tax will be 15 percent.
5. Productive foreign-invested enterprises can enjoy a total exemption of local income tax in the first one to two years from benefiting years and half an exemption in the following 3-5 years from benefiting profits.
Policies on the value-added Tax
1. After value-added tax of Software products produced by enterprises is levied at the rate of 17 percent, according to the tax law, the extra three percent will be given back to the enterprise.
2. The nil value-added tax rates will be used for exported software products produced by enterprises and export tax will be exempted. For technology export contract the sales tax and income tax will be exempted.
3. If the export value of software products produced by the enterprise exceeds $1 million, the enterprise can enjoy self-support software export right.
Policy on Tariff
1. For imported equipment used by the software enterprise itself, the technology (including software, the parts and spare parts imported together with the equipment, the import tax and import value-added tax will be exempted (commodities described in the category of foreign investment projects and non-tax-free imported commodities are not included) .
2. The import of apparatus and equipment to be used by high technology enterprises for the development of their high technology and which cannot be made at home shall be exempted from import duties, according to the approval papers issued by the authorities and the verification from the Customs.
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