Applause for the new corporate income tax ("CIT") accelerated depreciation policy for fixed assets
In order to upgrade China’s traditional industries and enhance technology innovation, on 24 September 2014, the Executive Committee of the State Council lead by Premier Li Keqiang announced to improve the fixed assets accelerated depreciation policy (New Policy) under the CIT Law. Pursuant to this announcement, the Ministry of Finance and the State Administration of Taxation jointly issued Caishui  No. 75 (Circular 75) recently, setting out regulations to implement this New Policy. Circular 75 is to have retrospective effect as of 1 January 2014.
The New Policy expands the scope of fixed assets (FA) to which the Accelerated Depreciation Methods for CIT deduction purpose under the CIT Law can be applied. It is expected that by doing so, companies’ cash flow will be improved and investments in certain industries will increase.
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