From 1 January 2023, the special deduction for research and development (R&D) activities conducted by enterprises, which can be claimed in addition to actual expenses, is 100% of the expenses incurred if the R&D activities have not created an intangible asset. Where the R&D activities have resulted in an intangible asset, the amortization base of that intangible will be 200% of the cost incurred. This is promulgated by the Announcement of the Ministry of Finance (MoF) and the State Taxation Administration (STA) [2023] No. 7 following the decision of the State Council under the leadership of the new Chinese premier Qiang Li.
The super-deduction is not new, however, the new Announcement applies to all enterprises regardless of the size of the enterprises (small or large) and sets no expiration date.
In respect of the requirements for eligibility and details regarding the implementation of the super-deduction, Circular of the Ministry of Finance (MoF) and the State Taxation Administration (STA) [2015] No. 119 and Circular of the MoF and the STA [2018] No. 64 continue to apply.