In accordance with a previous agreement reached between China and the United States, today the Chinese government will stop collecting value-added taxes on imported semiconductor products.

In June 2004, thinking that China's policies were unfairly biased against foreign chip manufacturers, the United States and China held talks that culminated in the cancellation of the tax.

China previously levied a 17% value-added tax on foreign semiconductor manufacturers and refunded 14% to local manufacturers.

The Chinese government has not formally publicized an alternative means to help local manufacturers recoup losses now that they will not receive the tax revenue. However, the National Development and Reform Commission is working on new rules that conform to WTO principles to support local semiconductor manufacturers.

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