Software Developers in China to Enjoy Tax Refunds
Enterprises developing their own software products or redesign imported software products can have part of their value-added tax (VAT) refunded, said China’s State Administration of Taxation (SAT) and Ministry of Finance.
Nationwide VAT refund on software products will be implemented when VAT general taxpayers sell software products that are developed by themselves or imported and then redesigned for localization reasons, VAT shall be charged at the rate of 17 percent, but the part of VAT in excess of 3 percent of the taxpayers’ actual VAT burden shall be refunded upon collection. Within every VAT collection term, the amount of VAT refund on software products which includes computer software products, information systems and embedded software products and can be calculated.
Software products that are eligible to enjoy the favorable VAT treatment should have the following qualifications such as testing proofs issued by software testing institutions that are recognized by provincial authorities in charge of the software industry. The sales value of self-developed software products and the sales value of other products such as computer networks, computer hardware, machinery, equipment, other types of goods, other types of software products and taxable services shall be calculated separately when it is possible, so that general taxpayers can receive the VAT refunds on the sales of the particular software products.