Circular of the Ministry of Finance and the State Taxation Administration on Improving the Enterprise Income Tax Policy With Respect to Accelerated Depreciation of Fixed Assets 

Caishui [2014] No. 75

Financial bureaus (departments), state tax bureaus and local tax bureaus of provinces, autonomous regions, municipalities directly under the central government, and cities specifically designated in the state plan, as well as the Finance Bureau of Xinjiang Production and Construction Corps:

In order to implement the spirit of the State Council on improving the accelerated depreciation policy for fixed assets, the following issues with respect to the enterprise income tax policy on accelerated depreciation of fixed assets are hereby notified:

    1. With respect to fixed assets newly purchased after January 1, 2014 by enterprises engaged in six industries including manufacture of biopharmaceuticals, manufacture of special-purpose equipment, manufacture of railways, ships, air and spacecraft and other transport equipment, manufacture of computers, communications and other electronic equipment, manufacture of instruments and meters, as well as service of information transmission, software and information technology, the recovery depreciation period may be shortened, or accelerated depreciation methods may be adopted.

Instruments and equipment newly purchased by small and low-profit enterprises in the six above-mentioned industries after January 1, 2014 for both R&D and production and operations use, of which the unit value does not exceed one million yuan, are allowed to be included in the current cost on a one-off basis and fully deducted when calculating taxable income, instead of being depreciated by year. If the unit value exceeds one million yuan, the recovery period may be shortened, or accelerated depreciation methods may be adopted.

2. Instruments and equipment newly purchased by enterprises in all industries specifically for R&D use, of which the unit value does not exceed one million yuan, are allowed to be included in the current cost on a one-off basis and fully deducted when calculating taxable income, instead of being depreciated by year. If the unit value exceeds one million yuan, the recovery period may be shortened, or accelerated depreciation methods may be adopted.

 3. Fixed assets held by enterprises in all industries, of which the unit value does not exceed 5,000 yuan, are allowed to be included in the current cost on a one-off basis and fully deducted when calculating taxable income, instead of being depreciated by year.

     4. If an enterprise shortens the recovery period in accordance with the provisions of Article 1 and Article 2 of this Circular, the minimum recovery period shall be no less than 60 percent of the recovery period stipulated in Article 60 of Implementation Regulations for Enterprise Income Tax Law. If accelerated depreciation methods are adopted, an enterprise may choose the double declining balance method or the sum of years method. The income tax issues with respect to accelerated depreciation of enterprises’ fixed assets other than those stipulated in Articles 1 to 3 of this Circular shall continue to be implemented in accordance with Enterprise Income Tax Law and its Implementation Regulations, as well as current tax policies.

5. This Circular shall be implemented from January 1, 2014.

Ministry of Finance   State Taxation Administration

October 20, 2014