China Tax/Business News Flash

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Nov 2015, Issue 43

Refining the super-deduction policy for research and development expenses - New opportunities and challenges

On 21 October 2015, Premier Li Keqiang hosted a State Council executive meeting and made a speech regarding refining the super deduction policy for Research and Development (R&D) expenses, enhancing the undertaking of R&D by enterprises, promoting structural adjustment and driving start-up and innovation. It was announced in the meeting that from 1 January 2016, the scope of R&D activities and R&D expenses eligible for super deduction will be expanded. For enterprises having expenses that satisfy the criteria for super deduction but had not enjoyed such preferential tax treatment in the relevant year, it will be possible to retrospectively apply for the treatment within a window of 3 years. Furthermore, the examination and verification procedure for R&D super deduction shall be simplified and such deduction will be subject to post record-filing administration.

Afterwards, the Ministry of Finance (MOF), State Administration of Taxation (SAT) and Ministry of Science and Technology (MST) jointly issued Caishui [2015] No.119 (Circular 119) clarifying the detailed implementation measures regarding the super deduction of R&D expenses for Corporate Income Tax (CIT) purpose.

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