06 June 2023 China introduces 'super-input VAT credit' policy for integrated circuit enterprises
The Ministry of Finance (MOF) and State Taxation Administration (STA) for The People's Republic of China recently introduced the "super-input VAT credit" policy for integrated circuit (IC) enterprises through Caishui [2023] No. 17 (Circular 17). The policy aims to support the development of the IC industry. From 1 January 2023 to 31 December 2027, general value-added tax (VAT) taxpayers engaging in IC design, manufacturing, equipment, materials, packaging and testing would be eligible for an extra 15% "super-input VAT credit." This allows qualified IC enterprises to credit their eligible input VAT at a rate of 115%. The relevant criteria, administration and list of qualified IC enterprises eligible for the credit will be further stipulated by the Ministry of Industry and Information Technology together with the MOF, STA, National Development and Reform Commission, and other relevant authorities. The calculation of the super-input VAT credit for IC enterprises is determined by deducting the input VAT for external purchases of chips from the deductible input VAT for the current period and multiplying the result by 15%. It is important to note that, aside from the super-input VAT credit policy introduced in Circular 17, there is a prevailing policy that grants an additional 5% or 10% super-input VAT credit for taxpayers engaging in certain services, allowing eligible input VAT to be credited at rates of 105% or 110%. This prevailing policy is in effect from 1 January 2023 to 31 December 2023. IC enterprises can only choose to apply one type of super-input VAT credit policy, even if they are eligible for multiple policies.
Document ID: 2023-1008 | |
