On July 12th, 2024, the Ministry of Finance (MOF) and the State Taxation Administration (STA) have jointly released the Announcement on Enterprise Income Tax Policies for the Digital and Intelligent Transformation of Specialized Equipment for Energy Conservation, Water Conservation, Environmental Protection, and Work Safety (the "Announcement").
The Announcement stipulates that for enterprises' input in the digital and intelligent transformation of specialized equipment incurred between January 1, 2024, and December 31, 2027, the portion not exceeding 50% of the original tax base at the time of purchase of the specialized equipment can be deducted from the enterprise's current year taxes payable at a rate of 10%. If the enterprise's payable taxes for the current year are insufficient for deduction, the excess can be carried forward to subsequent years, with a maximum carry-forward period of five years. Furthermore, the Announcement clarifies that the transformation input eligible for tax incentives refers to the expenditures incurred by enterprises during the digital and intelligent transformation of specialized equipment that contribute to the fixed asset value of the specialized equipment. This excludes value-added tax (VAT) refunds according to relevant regulations and the costs related to transportation, installation, and commissioning of the specialized equipment.
The Announcement is available here：https://fgk.chinatax.gov.cn/zcfgk/c102416/c5232952/content.html