The State Taxation Administration ("STA") released on May 31 2022 the Announcement on Matters Concerning Enterprise's Access to the Preferential Policy for Additional Deduction of Research and Development (R&D) Costs in Declaration and Prepayment of Corporate Income Tax (No.10 in 2022), with retroactive effect on January 1, 2022.
Compared with the 2021 rules, the new rules have kept the policy access timing and procedures unhanged. Specifically, an enterprise may decide on their own to access the preferential policy for additional deduction of R&D costs incurred in the first three quarters earlier when it declares for prepayment of the corporate income tax in October. If it does not choose to access the policy earlier, it may access the policy combined when it handles annual final settlement. An enterprise's access to the policy for additional deduction of R&D costs should be conditional on that "the costs are actually incurred, and the enterprise declares for the access on its own decision, with the relevant materials kept for future reference".