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Import tax exemption measures bring benefits to the sci-tech innovation industry

2021-5-10 14:56:08

Recently, a number of import tax exemption policies have been introduced, such as the “Circular on Import Tax Policies for Supporting the Development of the Integrated Circuit Industry and Software Industry”, the “Circular on the Tax Policies for Supporting Civil Aviation in the Import of Aviation Materials for Maintenance Purpose from 2021 to 2030”, and the “Circular on Import Tax Policies for Supporting the Development of the New Display Industry from 2021-2030”and the “Circular on the Import Tax Policies for Supporting Scientific and Technological Innovation during the 14th Five-Year Plan Period”.  Experts interviewed believe that technological innovation and emerging industries have received more policy support and it will bring benefits to the development of enterprises in the industry.

Important tax concessions on scientific and technological innovative products and services are expanding.

“In recent years, expanding imports has been one of the main focus of China.” Song Qinghui, an economist said in an interview with China Trade News that several import duty-free policies introduced by China exert positive impact on the expansion of imports, reflecting the increasing intensity of import reforms. It also helps to reduce consumer purchase costs and enrich domestic consumption choices.

The tax concession and exemption policy for scientific and technological innovation is an important part of the customs tax concession and exemption policy. The “Circular on Import Tax Policies for Supporting the Development of the Integrated Circuit Industry and Software Industry “specifies that the import tariffs are exempted for the self-use raw materials for production, consumables, special construction materials for clean rooms, supporting systems, and integrated circuit production equipment parts and accessories that cannot be produced in China or whose performance cannot meet demand of manufacturers for enterprises who produce logic circuits and memory with integrated circuit line widths less than 65 nanometers, as well as special process integrated circuit manufacturers with line widths less than 0.25 microns.

“The integrated circuit industry is the core of the information technology industry. China takes the development of the integrated circuit industry as an important part of its future science and technology strategy.” He Chen, an analyst in the electronics industry of Chasing Securities believed that thanks to the continuous promotion of relevant policies, technological breakthrough is expected to be achieved with acceleration of domestic substitution. Leading companies in the industry with core competitiveness will continue to enjoy the dual bonus of policies and markets.

Li Guangzhi, Chief Financial Officer of Huatian Technology (Kunshan) Electronics Co., Ltd. said that during the Covid-19 pandemic, Huatian Technology did not suffer setbacks but took more positive steps to invest 906 million yuan to launch an integrated circuit project and purchased 315 units imported equipment such as exposure machines and coating machines. “This decisive decision was made because of the strong support of tax concession and exemption policies. Tariff concession and exemption are tangible policy benefits for enterprises, enabling us to invest more capital in technological research and development as well as production lines. “

Benefits also are extended to new display industry besides the integrated circuit industry. The “Circular on Import Tax Policies for Supporting the Development of the New Display Industry from 2021-2030”stated that from January 1, 2021 to December 31, 2030, import tariffs will be exempted for the self-use raw materials for production, consumables, clean room supporting systems, production equipment parts and accessories that cannot be produced in China or whose performance cannot meet demand of enterprises who produce new display devices. The import tariffs are also waived for the self-use raw materials for production, consumables that cannot be produced in China or whose performance cannot meet demand of enterprises that produce key raw materials and parts in the new display industry.

According to Song, this will directly reduce the import costs of enterprises in the new display industry, and enterprises will therefore have more room for profit. Meanwhile, it is expected to play a huge role in promoting technological innovation and the development of emerging industries in China, improving product competitiveness, and connecting with international and domestic markets.

Compared with the import tax policy supporting scientific and technological innovation during the”13th Five-Year Plan” period, the policy scope of the “14th Five-Year Plan” has been significantly expanded. The issuance of the “Circular on the Import Tax Policies for Supporting Scientific and Technological Innovation during the 14th Five-Year Plan Period “specifies that the relevant preferential import tax policies that expired at the end of last year will continue to be implemented during the “14th Five-Year Plan” period, which is beneficial to scientific research institutions and technology development institutions to promote scientific and technological innovation. Among them, the CPC Party Schools (School of Administrations) and the libraries were included in the scope of preferential tax policies for scientific and technological innovation imports for the first time. In addition, the scope of scientific research institutions, technology development institutions, and schools are further expanded.

“Reduced the burden” for the development of the civil aviation industry

According to industry insiders, the aerospace industry is an important symbol of comprehensive national strength and a significant strategic emerging industry with intensive technology and high added value, which has an extensive driving effect on the development of the economy and society.

China continues to increase its support to the aerospace industry. The recently released “Circular on the Tax Policies for Supporting Civil Aviation in the Import of Aviation Materials for Maintenance Purpose from 2021 to 2030”specifies that from January 1, 2021 to December 31, 2030, the import tariffs are exempted for aviation maintenance equipment that cannot be produced in China or whose performance cannot meet the demand for qualified civil aircraft design and manufacturing enterprises, domestic airlines, maintenance institutions, and aviation equipment distributors.

Song Qinghui said that the exemption of import tariffs on aviation maintenance equipment has reduced the burden on the current development of civil aviation industry in China. It is reported that this policy extends to manufacturers, maintenance institutions, and aviation material distributors, covering most domestic aviation material importers. The policy will be valid for 10 years, which has a strong effect on stabilizing expectations.

According to Tang Jianqi, Deputy General Manager of Xiamen Airlines, a total of 209 aircraft is operated by its company, covering nearly 400 domestic and international routes, and it costs more than 2 billion yuan to maintain aircraft each year. From the perspective of Xiamen Airlines, this tax policy is expected to reduce costs by 30 million yuan each year, and it will also promote Xiamen Airlines to expand its maintenance business.

“As a joint venture established by Singapore Technologies Engineering Ltd. to engage in aircraft parts maintenance and modification in Xiament, ST Engineering Aerospace Technologies (Xiamen) Co Ltd. - STATCO was not in the special customs supervision area and was restricted by the inverted aviation material tax rate in the past. More than 80% of its business is conducted in overseas markets since it does not enjoy advantages in the Chinese domestic market.” Lin Tianqin, General Manager of the company, said that the introduction of the new policy will allow ST Engineering Aerospace Technologies to compete against domestic and international aviation maintenance companies, give full play to its advantages in production capacity and technology, and will greatly enhance its market competitiveness.

Song Qinghui suggested the state coordinate research with relevant parties to further improve the import tax policy in the future to better meet the actual needs of consumption upgrade and supply improvement.

(Source: CCPIT/ www.chinatradenews.com.cn)

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