Ministry of Finance and the State Taxation Administration recently released the Circular of the Ministry of Finance ("MOF") and the State Taxation Administration ("STA") on Allowing Integrated Circuit Enterprises for Additional Deduction of Payable Value-added Tax (the MOF and STA No.17 (2023) document).
Enterprises engaged in design, production, packaging and testing of integrated circuits ("IC"), as well as IC equipment and materials enterprises ("IC enterprises"), are allowed for additional deduction of payable VAT as per 15 percent of their deductible input tax for the current period during the period from January 1, 2023 to December 31, 2027, and those IC enterprises that are eligible for the deduction are subject to a list-based management. The specific policy application conditions, management ways and list of enterprises would be formulated by the Ministry of Industry and Information Technology in conjunction with the National Development and Reform Commission, the MOF, and the STA. If an IC enterprise is eligible for the application of several VAT additional deduction policies at the same time, it may choose the prefer one for application, and is not allowed to apply one more at the same time, said the Circular.