After repeated negotiations, China and members of the WTO, including the US, have finally reached an agreement on China’s controversial policy of returning VAT to domestic integrated circuit manufacturers.

Starting from September 1st, China has agreed to cease the policy of returning 6% more than the actual import VAT value for integrated products designed in China and processed abroad. From April 1st, 2005, it will also stop returning the domestic VAT for products made inside the country.

However, China has said that it will continue to encourage the development of its own integrated circuit industry and will try to provide favorable policies and services for domestic manufacturers.

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