In order to further encourage enterprises to increase
investment in research and development (R&D) activities, and to
better support technological innovation, the Ministry of Finance
and the State Tax Administration jointly issued the latest
announcement about the pre-tax additional deduction for R&D
expenses in March 2023.
According to this announcement, qualified enterprises are
allowed to deduct an additional 100% of R&D expenses on
top of actual expenses incurred if the R&D has not
formed intangible assets. If intangible assets are formed, the
enterprises are allowed to use 200% of the cost of intangible
assets as the amortizing basis. Compared to the previous policies,
this announcement extends the scope of enterprises that could
qualify. In the past, the highest additional deduction was only
available for certain industries or certain types of
enterprises.
