Encouraging the software industry and IC industry development policies to expire at the end of the year

Regarding the 18th document (Guo Fa [2000] No. 18 “Several Policies Encouraging the Development of the Software Industry and the Integrated Circuit Industry”) that will soon expire at the end of 2010, a 10-year “performance” will be called off.

On June 24, 2000, the State Council issued the No. 18 document, which opened the "golden age" for the rapid development of China's software industry and integrated circuit industry.

In the ten years, China's software industry revenue surged from 59.3 billion yuan in 2000 to 951.3 billion yuan in 2009, and is expected to reach 1.1 trillion yuan to 1.2 trillion yuan in 2010.

The IC design industry revenue also rose from RMB 1.1 billion in 2000 to RMB 27.9 billion in 2009. Together with packaging and manufacturing, the total output value exceeded RMB 110 billion.

If reviewing the original intention of the formulation of the policy - encouraging the rapid development of the two leading and basic industries of software and integrated circuits, No. 18 is undoubtedly quite successful.

However, looking at the entire "performance" of No. 18, the process is not perfect. Today, the new No. 18 document is on the verge of success, and the end of the old No. 18 document is worthy of reflection and reconstruction.

Different benefits

According to the design of No. 18 document, the software industry and the integrated circuit industry are tied together in the same document, and the tax preference policies for the two industries are not much different. After the value-added tax is levied at 17% of the statutory tax rate, the software industry will The portion that is more than 3% negative will be refunded, and IC companies will refund the portion of the actual tax burden that exceeds 6%.

However, due to the differences in the two industries themselves and the differences in the scale of policy control, there is a huge difference from the actual situation of the No. 18 document.

“From the point of view of the past 10 years, No. 18 document is performed better in terms of software, and integrated circuits are implemented with reference to the software industry. The situation of reference is not the same everywhere, and implementation is not as good as software.” Ministry of Industry and Information Technology software and integrated circuits promote Qiu Shanqin, deputy director of the Center (CSIP), said: "Since integrated circuits have higher barriers to entry, larger inputs, and longer output processes, local government support is insufficient in terms of export tax rebates and VAT refunds."

In addition, the integrated circuit industry chain includes design, manufacturing, processing, packaging, testing, and other aspects, but also involves the import of raw materials and equipment, compared with the software industry is much more complex.

"Software has no input other than artificial ones. The revenue and expenditure are very poor and the value-added tax is extremely high." Zhao Lun, general manager of Datang Microelectronics Technology Co., Ltd. stated that "integrated circuit design companies also have this nature, but because integrated circuits have actual products." Therefore, it is inevitable that they will be attacked by others when they enjoy VAT benefits."

In March 2004, the United States launched the WTO Dispute Settlement Procedures on China's integrated circuit VAT refund policy. After consultations, both parties signed a memorandum of understanding in Geneva in July of that year. Subsequently, the policy on value-added tax (VAT) and rebate on value-added tax (VAT) of the IC industry in the No. 18 document was suspended in April 2005.

Before and after this, the "Interim Measures for the Management of Special Funds for Research and Development of the Integrated Circuit Industry", the Nuclear Power Plant, the Electronic Information Industry Revitalization Plan and other national project measures were successively introduced, and were considered as compensatory measures for the adjustment of preferential policies for the IC industry.

“But these measures cannot be compared with the role played by the 18th document.” An industry source told the reporter of “Financial State Weekly” that “the so-called special funds need to pay taxes first and then subsidize some of the money from them. Retirement is a two-fold issue, and these funds follow the influence of many human factors in the course of the project and cannot support the industry very well."

"The most unsuccessful point in document No. 18 was forced by some pressure. By 2005, it was in name only." The source said.

On the other hand, whether it is the No. 18 document or the later national special fund, the actual benefits obtained by enterprises of different sizes are also very different.

For example, a design company like Tianjin Zhongjing Microelectronics Co., Ltd. can only enjoy the subsidy of the local service platform and the special fund of the innovative service enterprises in the high-tech zone. "The nuclear high base projects are very good, but only limited to some leading enterprises. For the small and medium-sized design companies, the most needed support should be the stage of innovation before the products come out." .

Zhang Jianren, general manager of Beijing Hongsi Electronic Technology Co., Ltd., also stated that at present, many national ministries and commissions don’t have project funds, and they do not have enough funds and scale to participate in the project. “We generally take small projects from Haidian District and Zhongguancun. We can't say that there is no support for innovative and innovative companies, but the support of each region is very different. Because there are too many high-tech companies in Haidian District, Beijing, it is You are not easy."

However, people in the industry believe that Document No. 18 is an industry policy that is to take the path of selling more products and paying more taxes, and then refunding taxes. It is impossible for a company to give a lot of benefits when it is established. "Small businesses do not enjoy preferential policies. They should not be in the region where they are located. There is also the fact that the company was established lately. The real business should be 2005 and 2006. In addition, innovation really depends on large companies. The same goes for foreign countries."

The development thinking of the software industry is also bigger and stronger. Zhao Xiaofan, Director of the Software Services Department of the former Ministry of Industry and Information Technology, and Vice Chairman of the China Software Industry Association, told the reporter of the “Financial State Weekly” that the income of the Chinese software service industry was created by more than 20,000 companies, while the software of the two companies of the United States, IBM and Microsoft The total service revenue will add up to more than 150 billion U.S. dollars, which exceeds China's total industry revenue in 2009. Therefore, the current policy is to help the strong and strong. In recent years, many of the country’s project investment and support funds have actually shifted in the direction of “minus the number of projects and the amount of additional funds”.

Executive problems

Specific to the implementation of the policy implementation level, software and integrated circuit companies also face many problems.

Yao Suying, the president of the Tianjin Integrated Circuit Industry Association, has trouble brainwashing tax refunds. “A few companies in the Tianjin Development Zone in the previous period faced the problem of export tax rebates. Local taxes did not understand how to locate such IC products. Later we took the Science and Technology Commission to the Customs and the taxation departments to communicate through various aspects. Solve.” Yao Suying told reporters that there is another design company that just started to see the income, but because they did not get the "VAT general taxpayer" qualification certification, can not enjoy the VAT levy, "a great impact."

“Some regions have misunderstood the design of integrated circuit design companies on the 18th as 'software companies'.” Jinge, general manager of Beijing Huada Zhibao Electronic Systems Co., Ltd., said that “the design companies generally have limited benefit.”

“Immediately to say that China's semiconductor industry developed rapidly after the release of the 18th document, especially the preferential policy that the VAT rebates.” Zhao Lun told reporters that although the local government immediately retired It is very difficult to implement, but it is still implemented after all, and it is an immediate measure.

"It is a pity that the total implementation time has not exceeded 3 years." An industry source said that after the Ministry of Finance and the State Administration of Taxation formulated the implementing regulations (namely No. 70) in 2002, and the introduction of the details by provinces and cities, the 18th article began to really play. In 2004, it died in the Sino-US semiconductor tax dispute.

In addition, in the No. 18 document investment and financing policy, there are also provisions for “supported by the state and set up a venture capital fund”. “This is also mentioned in the new 18th article, but it was not done 10 years ago,” said Xu Xiaotian, vice chairman of the China Semiconductor Industry Association. “At present, about 90% of the capital in the semiconductor industry is foreign or private. As an important basic and strategic industry, the state must have funds for capital operation, support mergers and acquisitions, and support the formation of the national team. The service platforms in various places are not capital or industries."

The software industry also faces new problems in the implementation of policies. For companies that increasingly use software to provide services, they do not sell software products themselves. Instead, they charge software usage fees (ie, service fees), so they do not pay. VAT, but to pay business tax and income tax.

"In order to circumvent the taxation of services, many companies offer several services free of charge when selling software products," Zhao Xiaofan said. "Because the service charge is included in the price of the product, you can enjoy VAT discount. If the service is removed from the product, another item For the collection of service fees, it is necessary to pay the corresponding income tax and business tax. The policy of No. 18 document does not specify the preferential taxation policy for software services, and it is also unfavorable to the national standardization statistics and to guide the development of the industry."

Despite all kinds of implementation issues, the industry still looks forward to maintaining the continuity of the 18-character policy.

However, the new No. 18 document is rather difficult to produce, and it has been postponed for several times since 2005, which has hit the industry's enthusiasm to some extent.

“We also participated in several meetings that solicit opinions. We did not expect much support for the follow-up support for the new No. 18 document.” The above-mentioned industry insiders believe that “it is obviously felt that the country’s financial investment is very tight, I think this There is a direct relationship with the late arrival of the new No. 18 document. The support for the industry is mainly in terms of policy, and the policy is actually based on money."

Change of the New Deal

“We should formulate policies with more preferential policies than document No. 18,” Zhao Xiaofan said. “At the time of the financial crisis, we should at least keep the original preferential policies unchanged and continue to support the rapid growth of China's software service companies in the next few decades.”

The reporter of the "Financial National Weekly" learned that the new 18th article, entitled "Some Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry," has been submitted to the State Council, which has changed the preferential measures for the two industries. .

For the software industry, on the basis of guaranteeing the original preferential policies, an important change is to separate software services from software products and incorporate them into preferential policies.

In this regard, Zhao Xiaofan pointed out that the policy focus of the new No. 18 document is that it should be more accurate, clearer, and more operational for the practice to prove that the measures in document No. 18 have obvious results. For example, when various localities implement the VAT rebate policy, the period of return to the enterprise part is not the same, and some places may not be refunded until the second year. Therefore, the return period should be clearly defined. Second, in recent years, software services have accelerated, and new policies to encourage and support software services should be added.

In fact, more and more software products no longer transfer property rights to users, but provide services through the Internet. "In the new document No. 18, we must give more policies to software service companies. Otherwise, it will greatly limit the development of cloud computing and SaaS model." Zhao Xiaofan said.

In addition, Qiu Shanqin said that the new No. 18 document will put the two industries in the same important position and solve the problem of insufficient coverage of the entire industry chain. The goal is to cultivate core competitiveness, improve the industrial chain, and improve the market environment. .

"We certainly have a result at the end of this year. We have started to plan some activities and systematically review and summarize the impact of the 18th document on the industry in the past decade, achievements, problems, and accumulated experience," said Qiu Shanqin.

However, Xu Xiaotian is still worried about the issue of VAT transformation in the integrated circuit industry. According to the national value-added tax reform plan, from the original production type to the consumption type, the production tools are allowed to arrive as input tax, and the imported equipment and spare parts are actually exempt from the VAT policy. It is a heavy blow to capital-intensive, technology-intensive IC manufacturing companies.

"When you import, you must first pay taxes, and then the products come out and come back, which is equivalent to discarding the preferential policies that originally granted the IC industry a tax exemption." Xu Xiaotian mentioned that when companies build new production lines or make technological changes, Changes in policies will take up large amounts of capital and greatly increase the cost of investment in equipment. "It is necessary to pay 20% more for a policy of converting value-added tax to consumption."

Regarding this issue, the new document No. 18 in the current “Fourth Draft” makes it relatively vague and only mentions that “the issue of value-added tax is led by the National Development and Reform Commission and the financial department will study it again”. The China Semiconductor Industry Association has also specifically addressed the issue of import value-added tax policies. It has joined the local associations to write letters to the leaders of the Ministry of Finance and the State Council. It suggests that "Continuing to implement the policies stipulated in the 18th document of the State Council, importing equipment and materials shall be exempt from customs duties and value-added tax. As soon as possible, we will introduce new preferential policies that further encourage the development of the integrated circuit industry. Industrial policies should cover more links in the industrial chain; IC companies' income tax will be halved by five exemptions."

"But we haven't discussed it yet." Xu Xiaotian said.