Circular of the State Administration of Taxation on Issues concerning the Treatment of Income Tax on Accelerated Depreciation of Enterprise Fixed Assets

Circular of the State Administration of Taxation on Issues concerning the Treatment of Income Tax on Accelerated Depreciation of Enterprise Fixed Assets

Guo Shui Fa [2009] No. 81

April 16, 2009

To the state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:

In accordance with the relevant provisions of the Law of the People's Republic of China on Enterprise Income Tax ( hereinafter referred to as the Enterprise Income Tax Law ) and the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China ( hereinafter referred to as the Implementing Regulations), we hereby notify the relevant issues concerning the treatment of income tax on the accelerated depreciation of enterprise fixed assets as follows:

I. In accordance with the relevant provisions of Article 32 of the Enterprise Income Tax Law and Article 98 of the Implementing Regulations, if the major or key fixed assets of an enterprise possessed and used for production and operation by the enterprise surely needs to be depreciated in an accelerated rate due to the following reasons, it may curtail the term of depreciation or adopt a method for accelerated depreciation:
1. Where the products quickly being replaced and upgraded due to technological progress; or
2. Where the fixed assets being in a state of vibration and being exposed to high degree of erosion.

II. Where the fixed assets possessed and used by an enterprise meet the provisions of Article 1 hereof, it may be handled according to the following circumstances:
1.
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