China Increases Pre-tax Deduction to Support Scientific and Technological Innovation
The Ministry of Finance ("MOF"), together with the State Taxation Administration ("STA") and the Ministry of Science and Technology ("MOST"), released on September 26, 2022 the Announcement on Increasing Pre-tax Deduction to Support Scientific and Technological Innovation.
It is clarified that hi-tech enterprises are allowed to make one-off deduction of their full cost for purchase of new equipment and instruments during the period from October 1, 2022 to December 31, 2022 in calculation of taxable income for the current year, and are also allowed to make 100 percent of pre-tax additional deduction. The policy is applicable to all enterprises that are qualified as hi-tech ones in the fourth quarter of 2022. If a qualified enterprise chooses to apply the policy in the current year but the cost does not reach the deductible amount, it can be carried over to following years for deduction according to existing rules.