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R&D-Related Tax Incentives Introduced for China-Based Science and Technology Companies

An enhanced R&D tax-deduction regime is set to be introduced for mainland businesses operating in the high-tech or scientific sectors. As outlined in a circular jointly-issued by the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology, the scheme has two key components:

  • In instances where previously-incurred R&D expenses have not been included in any prior current profit and loss account as intangible assets, an additional 75% on top of the actual R&D expense will be accepted as a taxable deduction for the period 1 January 2018-31 December 2020
  • In instances when intangible assets have been established, 175% of the costs of those intangible assets may be pre-tax amortised for the same period

For further details (in Chinese), please access the following link:

Circular on Enhanced Tax Deductions for R&D Expenses (Cai Shui No. 99 [2018])

Content provided by Picture: HKTDC Research
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