Top Biz News

Policy to aid semiconductor industry

By Liu Baijia (China Daily)
Updated: 2006-07-20 09:00

The new proposal says semiconductor companies will not need to pay income tax for the first five years after they become profitable, and will only pay half their income taxes over the next five years.

Yang Xueming, a member of the team drafting the 2000 guideline, said financial support for research and development is another targeted area.

China has already set up a 500 million yuan (US$62.5 million) fund to help semiconductor companies' research.

The proposals also include research loans, or using research expenditure to offset taxes.

Richard Chang, president and CEO of Shanghai-based Semiconductor Manufacturing International, the biggest semiconductor company on the Chinese mainland, said China could learn from Taiwan, where the government gave financial assistance to research and development.

He added the government should also tempt experts from overseas to work in China with income tax reductions.

Other proposed policies include allowing tax reductions on imported equipment, or setting up a special fund for integrated circuit design.

Yang estimated that China still needs 200 billion yuan (US$25 billion) of investment in the semiconductor industry before 2010, so the Government should also work out a plan to help companies get financial backing, as the semiconductor industry, especially manufacturing, is a cash-thirsty business.