Updated: 2024-07-26 Source: STA General Office

Announcement of the Ministry of Finance and the State Taxation Administration on Further Improving the Policy of Super Deduction for Research and Development Expenses

Ministry of Finance  State Taxation Administration Announcement No.7 of 2023

In order to further encourage enterprises to increase investment in research and development and better support scientific and technological innovation, the issues with respect to the policy of super deduction for enterprises’ research and development expenses are hereby announced as follows:

1. Where the research and development expenses actually incurred in an enterprise’s research and development activities are included in the current profits or losses before they become intangible assets, a super deduction of 100 percent of the research and development expenses shall be made in addition to the deduction of actual expenses in accordance with relevant regulations from January 1, 2023. Where they become intangible assets, the expenses shall be amortized before tax at 200 percent of the cost of the intangible assets from January 1, 2023.

2. Other standards and administration requirements for enterprises to enjoy the policy of super deduction for research and development expenses shall be implemented in accordance with the relevant provisions of Circular of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Improving the Policy of Super Deduction for Research and Development Expenses (Cai Shui [2015] No. 119), Circular of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Issues With Respect to the Policy of Super Deduction for Overseas and Contracted-Out Research and Development Expenses (Cai Shui [2018] No. 64), and other relevant documents.

3. This Announcement shall enter into force from January 1, 2023. Announcement of the Ministry of Finance and the State Taxation Administration on Further Improving the Policy of Super Deduction for Research and Development Expenses (Ministry of Finance   State Taxation Administration Announcement No. 13 of 2021), Announcement of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Further Increasing the Super Deduction Percentage of Research and Development Expenses for Hi-Tech Small and Medium-sized Enterprises (Ministry of Finance   State Taxation Administration   Ministry of Science and Technology Announcement No. 16 of 2022), and Announcement of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Further Enhancing Pre-tax Deductions to Support Technological Innovation (Ministry of Finance   State Taxation Administration   Ministry of Science and Technology Announcement No. 28 of 2022) shall be repealed simultaneously.

Ministry of Finance  State Taxation Administration

March 26, 2023

All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.