State Administration of Taxation, Issues Concerning the Implementation Approach, etc. of Relevant Provisions on Income Tax Preferential Policies for Software Enterprises and High and New Technology Enterprises Circular

Issued: May 29 2003
Effective: January 1 2003

Main contents: The Circular clarifies some issues arising from the implementation of the Several Policy Issues Relevant to Encouraging the Development of the Software and Integrated Circuit Industries Circular (Circular) and the Tax Policies for Further Encouraging the Development of the Software and Integrated Circuit Industries Circular. "Newly run software production enterprises" mentioned in the Circular refers to software production enterprises newly run after July 1 2000 (Item One). The first profit-making year of a software production enterprise means the first year the enterprise has taxable income after starting operation (Item Two). The years of tax exemption and reduction should be counted continuously starting from the first profit-making year and should not be deferred if losses are incurred in between (Item Three). Enterprises recognized as newly run software production enterprises and at the same time newly run high and new technology enterprises in high and new technology industrial development zones approved by the State Council can enjoy a 50% reduction of enterprise income tax, which is calculated at the rate of 15% during the tax reduction period and at the rate of 15% thereafter (Item Four).
Related legislation: Several Policy Issues Relevant to Encouraging the Development of the Software and Integrated Circuit Industries Circular, 2000 and Tax Policies for Further Encouraging the Development of the Software and Integrated Circuit Industries Circular, 2002