General Administration of Taxation, Ministry of Finance: Announcement on Further Improving the Policy of Pre-tax Deduction of Research and Development Expenses

Announcement of the Ministry of Finance and the State Administration of Taxation No. 13 of 2021

　　In order to further encourage enterprises to increase investment in research and development and support scientific and technological innovation, the relevant issues concerning the policy of pre-tax deduction of enterprise research and development expenses are hereby announced as follows:

　　If the R & D expenses actually incurred in the R & D activities of 1. manufacturing enterprises are not included in the current profits and losses as intangible assets, 100% of the actual amount will be deducted before tax from January 1, 2021. If an intangible asset is formed, it will be amortized before tax at 200% of the cost of the intangible asset from January 1, 2021.

　　The term "manufacturing enterprise" as mentioned in this Article refers to an enterprise whose main business is manufacturing business and whose main business income accounts for more than 50% of its total income in the year when it enjoys preferential treatment. The scope of the manufacturing industry is determined in accordance with the National Economic Industry Classification (GB/T 4574-2017), such as the relevant state departments to update the National Economic Industry Classification, from its provisions. The total amount of income shall be implemented in accordance with the provisions of Article 6 of the Enterprise Income Tax Law.

　　When 2. enterprises prepay and declare the enterprise income tax in the third quarter of the year (quarterly prepayment) or September (monthly prepayment), they can choose to enjoy the preferential policy of additional deduction for the research and development expenses in the first half of the year, and adopt the processing method of "self-discrimination, declaration and enjoyment, and retention of relevant data for future reference.

　　Eligible enterprises can calculate the amount of additional deduction by themselves, fill in the "the People's Republic of China Enterprise Income Tax Monthly (Quarterly) Prepayment Tax Return (Class A)" to enjoy tax incentives, and according to the R & D expenses that enjoy the additional deduction (first half of the year) Fill in the "R & D Expenses Plus Deduction Preferential List" (A107012). The Schedule of Preferential Deductions for Research and Development Expenses (A107012) shall be retained for future reference together with other information stipulated in relevant policies.

　　When an enterprise handles the prepayment declaration in the third quarter or September, if it does not choose to enjoy the preferential policy of adding and deducting R & D expenses, it can enjoy it uniformly when handling the final settlement in the following year.

　　Other policy calibers and management requirements for 3. enterprises to enjoy the R & D expense deduction policy shall be implemented in accordance with the "Notice of the Ministry of Finance, the State Administration of Taxation, the Ministry of Science and Technology on Improving the Pre-tax Deduction Policy for Research and Development Expenses" (Caishui [2015] No. 119), "Notice of the Ministry of Finance and Taxation of the Ministry of Science and Technology on Relevant Policy Issues Concerning the Pre-tax Deduction of Entrusted Overseas Research and Development Expenses" (Caishui) (Caishui).

　　4. This announcement shall be implemented as of January 1, 2021.

　　It is hereby announced.

　　Ministry of Finance

General Administration of Taxation

March 31, 2021