- China has introduced a new tax benefit for Integrated Circuit (IC) corporations called the “super-input VAT credit policy”, which allows eligible companies to deduct 115% of the input VAT incurred in external purchases of chips from their taxable income.
- This policy promotes liquidity and competitiveness without distorting the principle of neutrality or interfering with VAT mechanics.
- While this approach may be seen as State aid and therefore goes against EU rules and regulations, it should be perceived as amendments to a given jurisdiction’s tax system in the context of regular enforcement of tax sovereignty.
- However, EU Member States may not have the chance to promote similar schemes due to the lack of flexibility in the EU-VAT common system rules and regulations.
- This may lead to the EU becoming a lesser competitor for tax purposes in attracting new economic players.
Source Tax Research Lab
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