Circular of the State Administration of Taxation on Printing and Issuing the Administrative Measures for the Pre-tax Deduction of Enterprises' Expenditures for Research and Development (for Trial Implementation)
Circular of the State Administration of Taxation on Printing and Issuing the Administrative Measures for the Pre-tax Deduction of Enterprises' Expenditures for Research and Development (for Trial Implementation)
Circular of the State Administration of Taxation on Printing and Issuing the Administrative Measures for the Pre-tax Deduction of Enterprises' Expenditures for Research and Development (for Trial Implementation)
Guo Shui Fa [2008] No. 116
December 10, 2008
The Offices of the State Administration of Taxation and local taxation bureaus at all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan,
The Administrative Measures for the Pre-tax Deduction of Enterprises' Expenditures for Research and Development (for Trial Implementation) are hereby printed and issued to you for your implementation in compliance. Please report any problem occurring during your implementation to (the Income Tax Department of) the State Administration of Taxation in a timely manner.
Administrative Measures for the Pre-tax Deduction of Enterprises' Expenditures for Research and Development (for Trial Implementation)
Article 1 With a view to encouraging the research and development activities of enterprises and regulating the implementation of the pre-tax deduction of enterprises' expenditures for research and development and relevant preferential policies on taxation, these Measures are formulated in accordance with relevant provisions of the Law of the People's Republic of China on Enterprise Income Tax and its Regulations for the Implementation, the Law of the People's Republic of China on the Administration of Tax Levying and its Implementation Details, and the Circular of the State Council on Printing, Issuing and Implementing Several Supporting Policies for the Outline of the State Medium and Long-term Scientific and Technical Development (2006-2020) (Guo Fa [2006] No. 6).
Article 2 These Measures shall apply to resident enterprises that have sound financial accounting system and can accurately classify research and development expenses (hereinafter referred to as "enterprises").
Article 3 "Research and development activities" as referred to in these Measures means the continuous research and development activities towards definite objectives carried out by the enterprises for the purpose of procuring new knowledge of science and technology (excluding humanities and social sciences), using new scientific and technological knowledge in a creative manner or improving technologies, technique or products (services) materially.
Creative use of new scientific and technological knowledge or material improvement of technologies, technique or products (services) mean that enterprises reap the valuable fruits through innovative research and development in terms of technologies, technique or products (services), and such fruits promote the technologies or technique of the local region (province, autonomous region, municipality directly under the Central Government or city specifically designated in the state plan) to a leading place in relevant industries, with the exception of conventional upgrading of enterprises' products (services) or direct application of open scientific research results and so on (such as direct adoption of open new technique, materials, equipments, products, services or knowledge, etc).
Article 4 Where an enterprise is engaged in the research and development on the subjects as listed in the Hi-tech Sectors with Primary Support of the State Support and the Guideline of the Latest Key Priority Developmental Areas in the High Technology Industry (2007) jointly issued by the National Development and Reform Commission and other departments, such enterprise may, in accordance with relevant provisions, additionally calculate and deduct the following actual expenditures incurred by the enterprise in a tax year when calculating the taxable income amount.
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