China decreases tax rates for chipmakers in the face of trade tensions

China decreases tax rates for chipmakers in the face of trade tensions

On Friday, China's finance ministry told that it rolled out fresh tax breaks as well as exemptions for companies producing semiconductors, with the aim of diminishing dependence on foreign processors amid trade tensions with America over technology transfers.

The move showed up as the United States is seriously considering imposing duties on $50 billion worth of China’s exports, pointing to reportedly discriminatory trade practices in the high-tech industry, including semiconductors.

Chipmakers are going to be freed from corporate taxes for 2-5 years after partial deductions. That’s what the ministry told in a notice available on its official website on Friday.

As a matter of fact, the exemptions cover an array of products, from cutting-edge processors to something very basic.

The fresh rules turn to be effective from January 1, this year.

Foreign semiconductors are what China heavily relies on. By value they happen to be one of the country’s largest import categories.  

China is considering overtaking foreign counterparts and becoming the number one semiconductor producer by approximately 2030, as follows from its own roadmap.

As a rule, China's ambitions have always irritated overseas watchdogs. They have banned a number of acquisition attempts by Chinese companies seeking to spur their development via technology transfers.

The Trump presidential administration is requesting China buy more semiconductors from America as part of the initiative to avert proposed duties as well as a potential trade conflict. That’s what Reuters informed on Tuesday.

As follows from Friday's notice, businesses manufacturing high-end chips employing 65 nanometer technology or smaller and with an investment of more than 15 billion Yuan are going to be freed from corporate taxes for up to five years. Those manufacturing processors utilizing 130 nanometer technology and smaller are going to be tax exempt for about two years.

 

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