New Pre-Tax Reduction Policies Supporting Enterprise Innovation

November 11, 2022 | BY

Susan Mok

Daisy Duan and Sara Shi of King & Wood Mallesons review newly introduced regulations supporting pre-tax deductions for enterprise innovation in science and technology in China including recommended action to take advantage of these new tax preferential policies.

Summary

  • HNTEs are entitled to enjoy a 100% super deduction of the purchase amount of the equipment and appliance newly acquired during the period from October 1, 2022 to December 31, 2022 before EIT.
  • Enterprises entitled to the current additional pre-tax deduction ratio of 75% for R&D expenses, can apply a ratio of 100% during the period from October 1, 2022 to December 31, 2022.
  • Where the R&D expenses do not form intangible assets and are included in the current profits and losses, on the basis of actual amount or proportional amount calculated, an additional 100% of such R&D expenses could be deducted from the taxable income amount. Where intangible assets are formed, amortization will be based on 200% of the costs of the intangible assets before EIT.

 

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