National Development [2020] No. 8
People's Governments of all provinces, autonomous regions, and municipalities directly under the central government; all ministries and commissions of the State Council and their directly affiliated institutions:
We are now issuing to you the “Several Policies for Promoting High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era.” Please ensure thorough implementation and enforcement.
State Council
2020 July 27
(This document is publicly released.)
Promoting the Integrated Circuit Industry and the Software Industry in the New Era
Several Policies for High-Quality Development
The integrated circuit industry and the software industry are the core of the information technology sector and serve as key driving forces behind the new round of scientific and technological revolution and industrial transformation. Since the issuance of the “Notice of the State Council on Promulgating Several Policies to Encourage the Development of the Software Industry and the Integrated Circuit Industry” (Guofa [2000] No. 18) and the “Notice of the State Council on Promulgating Several Further Policies to Encourage the Development of the Software Industry and the Integrated Circuit Industry” (Guofa [2011] No. 4), China’s integrated circuit industry and software industry have experienced rapid development, providing strong support for the country’s informatization efforts and promoting the sustained, healthy development of the national economy and society. To further optimize the development environment for the integrated circuit industry and the software industry, deepen international cooperation in these industries, and enhance their innovation capabilities and development quality, the following policies are hereby formulated.
I. Fiscal and Tax Policies
(1) Integrated circuit enterprises or projects that meet the state’s encouragement criteria—having a feature size of 28 nanometers or less (inclusive) and an operational period of 15 years or longer—are exempt from corporate income tax from the first to the tenth year. For integrated circuit enterprises or projects meeting the state’s encouragement criteria—having a feature size of 65 nanometers or less (inclusive) and an operational period of 15 years or longer—their corporate income tax is exempt from the first to the fifth year, and from the sixth to the tenth year, it is levied at half the statutory rate of 25%. For integrated circuit enterprises or projects meeting the state’s encouragement criteria—having a feature size of 130 nanometers or less (inclusive) and an operational period of 10 years or longer—their corporate income tax is exempt from the first to the second year, and from the third to the fifth year, it is levied at half the statutory rate of 25%. Losses incurred by integrated circuit enterprises encouraged by the state and having a feature size of 130 nanometers or less (inclusive) may be carried forward to subsequent years; the maximum carryforward period shall not exceed 10 years.
For integrated circuit production enterprises enjoying tax preferential policies, the preferential period shall be calculated starting from the year in which the enterprise becomes profitable. For integrated circuit production projects enjoying tax preferential policies, the preferential period shall be calculated starting from the tax year in which the project generates its first revenue from production and operations. The list of integrated circuit production enterprises or projects encouraged by the state is formulated jointly by the National Development and Reform Commission and the Ministry of Industry and Information Technology together with relevant departments.
(2) Integrated circuit design, equipment, materials, packaging, and testing enterprises, as well as software enterprises, that are encouraged by the state shall be exempt from corporate income tax from the first to the second year starting from the year in which they become profitable. From the third to the fifth year, their corporate income tax shall be levied at half the statutory rate of 25%. The criteria for integrated circuit design, equipment, materials, packaging, and testing enterprises that are encouraged by the state shall be formulated jointly by the Ministry of Industry and Information Technology and relevant departments.
(3) Key integrated circuit design enterprises and software enterprises encouraged by the state shall be exempt from corporate income tax from the year they first become profitable through the fifth year, and in subsequent years, their corporate income tax shall be levied at a reduced rate of 10%. The list of key integrated circuit design enterprises and software enterprises encouraged by the state shall be formulated jointly by the National Development and Reform Commission and the Ministry of Industry and Information Technology together with relevant departments.
(4) The conditions and scope of the income tax preferential policies implemented by the state for integrated circuit enterprises or projects and software enterprises shall be dynamically adjusted according to developments in industrial and technological progress. For integrated circuit design enterprises and software enterprises, the corporate income tax payable in years prior to the implementation of this policy shall continue to be governed by the “two-year exemption and three-year half-rate reduction” preferential policy for corporate income tax as specified in Document No. 4 [2011] issued by the State Council.
(5) Continue implementing the value-added tax preferential policies for integrated circuit enterprises and software enterprises.
(6) For a specified period, enterprises engaged in the production of logic circuits and memory devices with integrated circuit linewidths of 65 nanometers or less (inclusive), as well as enterprises engaged in the production of specialized-process integrated circuits with linewidths of 0.25 micrometers or less (inclusive)—including those producing masks and silicon wafers of 8 inches or larger—will be exempt from import tariffs on productive raw materials and consumables imported for their own use, as well as on specialized construction materials for cleanrooms, supporting systems, and spare parts for integrated circuit manufacturing equipment. Furthermore, enterprises engaged in the production of compound integrated circuits with linewidths of 0.5 micrometers or less (inclusive) and advanced packaging and testing enterprises will also be exempt from import tariffs on productive raw materials and consumables imported for their own use. Specific policies shall be formulated by the Ministry of Finance in coordination with the General Administration of Customs and other relevant departments. The lists of eligible enterprises and the lists of duty-free goods shall be jointly developed by the National Development and Reform Commission and the Ministry of Industry and Information Technology together with other relevant authorities.
(7) For a specified period, key integrated circuit design enterprises and software enterprises that are encouraged by the state, as well as integrated circuit manufacturing enterprises and advanced packaging and testing enterprises referred to in Article (6), shall be exempt from import tariffs on equipment imported for their own use, as well as on technologies (including software), accompanying components, and spare parts imported together with such equipment under contract—provided that these items are not listed in the relevant catalog of imported goods that are not eligible for tax exemptions. The specific policies shall be formulated jointly by the Ministry of Finance in coordination with the General Administration of Customs and other relevant departments.
(8) For a specified period, enterprises undertaking major integrated circuit projects may pay the value-added tax on imported equipment in installments. The specific policy will be formulated by the Ministry of Finance in coordination with relevant departments such as the General Administration of Customs.
II. Investment and Financing Policies
(9) Strengthen services and guidance for the construction of major integrated circuit projects, systematically guide and regulate the order of integrated circuit industry development, ensure sound planning and layout, enhance risk warnings, and avoid low-level redundant construction.
(10) We encourage and support integrated circuit enterprises and software enterprises to strengthen resource integration. Relevant departments of the State Council and local governments shall actively support and guide enterprise restructuring and mergers & acquisitions conducted in accordance with market-oriented principles, and shall not impose any restrictions beyond those stipulated by laws, regulations, and policies.
(11) Fully leverage existing national and local government investment funds to support the development of the integrated circuit industry and the software industry. Encourage social capital, in accordance with market-oriented principles, to raise funds through multiple channels and establish investment funds, thereby enhancing the market-oriented nature of these funds.
(12) Local governments are encouraged to establish loan risk compensation mechanisms to support integrated circuit and software enterprises in obtaining commercial loans through various means, including intellectual property-backed financing, equity-backed financing, accounts receivable-backed financing, supply-chain finance, and technology and intellectual property insurance. The role of financing guarantee institutions should be fully leveraged, and they should actively provide various forms of financing guarantee services for small and micro enterprises in the integrated circuit and software sectors.
(13) Encourage commercial financial institutions to further enhance their financial services, increase support for medium- and long-term loans to the integrated circuit industry and the software industry, actively innovate credit products tailored to the development of these industries, and, on the premise of controllable risks and commercial sustainability, step up financial support for major projects. Guide insurance funds to engage in equity investments; and support non-bank financial institutions such as bank wealth management companies, insurance firms, and trust companies in launching specialized asset management products.
(14) Strongly support integrated circuit enterprises and software enterprises that meet the eligibility criteria to list and raise funds both domestically and internationally. Accelerate the review process for domestic listings, and allow R&D expenditures that meet the relevant requirements of enterprise accounting standards to be capitalized. Encourage and support eligible enterprises to list and raise funds on the STAR Market and the ChiNext Board, and facilitate smooth exit channels for original shareholders of these enterprises. Through capital markets at different levels, provide equity financing, equity transfers, and other services to integrated circuit enterprises and software enterprises at various stages of development, expand direct financing channels, and increase the proportion of direct financing.
(15) Encourage integrated circuit enterprises and software enterprises that meet the eligibility criteria to issue corporate bonds, company bonds, short-term financing notes, and medium-term notes, thereby broadening their financing channels and supporting them in raising funds from the bond market through medium- and long-term bonds and other such instruments.
III. Research and Development Policy
(Sixteen) Focus on R&D of key core technologies in high-end chips, integrated circuit equipment and process technologies, critical materials for integrated circuits, integrated circuit design tools, foundational software, industrial software, and application software. Continuously explore and establish a new national system for tackling key core technologies under the conditions of the socialist market economy. The Ministry of Science and Technology, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and other relevant departments shall organize and implement related work, and actively leverage support from the National Key R&D Program and major national science and technology projects.
(17) In fields such as advanced storage, advanced computing, advanced manufacturing, high-end packaging and testing, critical equipment and materials, and next-generation semiconductor technologies, we will promote the establishment of various innovation platforms tailored to industry characteristics. The Ministry of Science and Technology, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and other relevant departments will give priority support to these innovation platforms in implementing R&D projects.
(18) Encourage software enterprises to implement national standards for software quality, information security, development management, and other related areas. Strengthen the building of integrated circuit standardization organizations, improve the standard system, enhance standard verification, and boost R&D capabilities. Raise the quality of integrated circuits and software, and enhance the industry’s competitiveness.
IV. Import and Export Policies
(19) Within a specified period, key integrated circuit design enterprises and software enterprises that are encouraged by the state may temporarily import self-used equipment (including development and testing equipment), software and hardware environments, prototypes, components, and parts, provided they meet the prescribed requirements. Such temporary imports shall be subject to customs procedures for temporarily admitted goods, and the import taxes shall be levied in accordance with current regulations.
(20) For software export contracts signed between software enterprises and foreign enterprises with high credit ratings, financial institutions may provide financing and insurance support based on the principles of independent loan review and controllable risks.
(21) Promote exports of integrated circuits, software, and information technology services; vigorously develop international service outsourcing business; and support enterprises in establishing overseas marketing networks. The Ministry of Commerce, together with relevant departments, will establish long-term cooperation mechanisms with key countries and regions and adopt comprehensive measures to create favorable conditions for enterprises to expand into emerging markets.
V. Talent Policy
(22) Further strengthen the development of integrated circuit and software programs in higher education institutions, accelerate efforts to establish first-level disciplines in integrated circuits, closely align curriculum design, teaching plans, and teaching methods with the needs of industrial development, and strive to cultivate high-level, versatile, and practical talents. Enhance the development of faculty teams, teaching laboratories, and internship and training bases for integrated circuit and software programs. The Ministry of Education, together with relevant departments, will step up supervision and guidance.
(23) Encourage higher education institutions with the necessary conditions to accelerate the development of model microelectronics colleges through cooperation with integrated circuit enterprises. Give priority to establishing and nurturing industry-education integration enterprises in the field of integrated circuits. For pilot enterprises included in the scope of industry-education integration enterprise development and cultivation, investments made in running vocational education that meet the relevant regulations may be offset against the enterprise’s annual payable education surcharge and local education surcharge at a rate of 30% of the investment amount. Encourage relevant social industrial investment funds to increase their investment and support universities in collaborating with enterprises to build specialized resource libraries for integrated circuit talent development. Support model microelectronics colleges and specialized model software colleges in partnering with internationally renowned universities and multinational corporations to introduce overseas faculty and high-quality resources, and jointly cultivate talents in integrated circuits and software.
(24) Encourage localities to recognize and reward, in accordance with national regulations, high-end talents who have made outstanding contributions in the fields of integrated circuits and software, as well as high-level engineers and R&D and design personnel. Further refine equity incentive mechanisms. Through relevant talent programs, intensify efforts to attract top-notch experts, outstanding talents, and entire teams. In industrial clusters or related industry agglomerations, prioritize exploring policies aimed at attracting talent in the fields of integrated circuits and software. Develop and implement annual plans for the recruitment and training of integrated-circuit and software talent, and promote the establishment of national international training bases for integrated-circuit and software talent, with a particular focus on strengthening medium- and long-term training for urgently needed and scarce professional talents.
(25) Strengthen industry self-regulation, guide the rational and orderly flow of integrated circuit and software talent, and prevent malicious competition.
VI. Intellectual Property Policy
(26) Encourage enterprises to register their proprietary rights to integrated circuit layout designs and software copyrights. Support integrated circuit and software enterprises in applying for intellectual property rights in accordance with the law, and provide relevant support to those that meet the applicable regulations. Vigorously develop intellectual property services related to integrated circuits and software.
(27) Strictly implement the intellectual property protection system for integrated circuits and software, and intensify penalties for intellectual property infringement and illegal activities. Strengthen protection of proprietary rights in integrated circuit layout designs and software copyrights in the online environment; actively develop and apply technologies for protecting online copyrights of genuine software, thereby effectively safeguarding the intellectual property rights of integrated circuits and software.
(28) Explore the establishment of a long-term mechanism for promoting the use of genuine software. All computers sold within China—whether large-scale computers, servers, microcomputers, or laptops—must come pre-installed with genuine software; the sale of computers pre-installed with non-genuine software is strictly prohibited. Fully implement government policies and measures for the use of genuine software in government agencies, adopt centralized government procurement for commonly used software, and strengthen the management of software assets. Promote the institutionalization and standardization of the use of genuine software in key industries and critical sectors. Enhance publicity, training, and supervision and inspection efforts related to the use of genuine software, thereby fostering a favorable environment for its adoption.
VII. Market Application Policies
(29) Through policy guidance and driven by market applications, we will intensify efforts to promote innovative integrated circuit and software products, thereby driving continuous upgrades in both technology and industry.
(30) Promote the clustered development of the integrated circuit industry and the software industry, support the construction of information technology service industry clusters and integrated circuit industry clusters, and encourage specialized and high-end development of software industry parks.
(31) Support key enterprises, research institutes, universities, and other innovation entities in the integrated circuit and software sectors to establish various specialized innovation service institutions, represented by professional maker spaces. Optimize the allocation of innovation resources—including technology, equipment, capital, and markets—and provide specialized services focused on the integrated circuit and software sectors in accordance with market mechanisms, thereby fostering integrated development among large, medium, and small enterprises. Increase support for specialized platforms such as professional maker spaces, science and technology business incubators, and university science parks that serve the integrated circuit and software industries, and enhance their capacity to deliver specialized services.
(32) Actively guide the development of IT research and development, application, and business services through outsourcing. Encourage government departments, via service procurement, to entrust qualified software and information technology service providers with tasks within the scope of government responsibilities—such as e-government construction, data center establishment, and data processing—that are suitable for provision through market-oriented approaches. Expedite the formulation and improvement of relevant security review and confidentiality management regulations. Encourage large and medium-sized enterprises, leveraging their IT research and development and application capabilities, to establish specialized software and information technology service enterprises.
(33) Improve the system for protecting consumer privacy and trade secrets in the online environment, and promote the network-based development of software and information technology services. Promote software products and services that meet security requirements across government agencies and public institutions at all levels.
(34) Further standardize the market order in the integrated circuit and software industries, strengthen antitrust enforcement, crack down on all forms of monopolistic practices in accordance with the law, conduct thorough antitrust reviews of business operators, and safeguard fair competition in the integrated circuit and software industries. Strengthen enforcement against unfair competition and crack down on all types of unfair competitive practices in accordance with the law.
(35) Fully leverage the roles of industry associations and standardization organizations, accelerate the development of standards related to integrated circuits and software, and promote norms for integrated circuit quality evaluation and software development cost measurement.
VIII. International Cooperation Policy
(36) Deepen global cooperation in the integrated circuit and software industries, and actively create a favorable environment for international enterprises investing and developing in China. Encourage domestic universities and research institutes to strengthen cooperation with high-level overseas universities and research institutions, and encourage international enterprises to establish R&D centers in China. Enhance communication and exchanges between domestic industry associations and international industry organizations, support domestic enterprises in collaborating with international companies both domestically and abroad, and promote their deep involvement in international market division of labor, collaboration, and the formulation of international standards.
(37) Promote the “going global” of the integrated circuit and software industries. Facilitate domestic enterprises in jointly establishing R&D centers overseas, thereby making better use of international innovation resources to elevate the development level of these industries. Relevant departments, including the National Development and Reform Commission and the Ministry of Commerce, will enhance their service levels and create a favorable environment for enterprises to engage in investment and other forms of cooperation.
IX. Supplementary Provisions
(38) All qualified integrated circuit enterprises (including those engaged in design, manufacturing, packaging, testing, equipment, and materials) and software enterprises established within the territory of China—regardless of their ownership structure—are eligible to benefit from this policy.
(39) This policy shall be interpreted by the National Development and Reform Commission in conjunction with the Ministry of Finance, the State Administration of Taxation, the Ministry of Industry and Information Technology, the Ministry of Commerce, the General Administration of Customs, and other relevant departments.
(40) This policy shall take effect from the date of its issuance. The policies explicitly stipulated in Document No. 18 [2000] and Document No. 4 [2011] issued by the State Council shall continue to be implemented. In case of any inconsistency between these previously issued policies and this policy, this policy shall prevail.
