September 2018 / China

SAT published that newly purchased equipment and instrument are allowed to be included in the current costs and expenses at one time and deducted in the calculation of taxable income, instead of being depreciated annually from 2018 to 2020. The equipment and instrument refer to fixed assets other than houses and buildings. And the deduction cap is no more than CNY 5 Million.

Shanghai Administration for Industry and Commerce issued on September 6, 2018 the Guideline about Further Reforming the Exit Mechanism for Market Entities. According to the guideline, traditional problems that have obstructed business cancellations will be addressed, and fewer documents will be required for simple cancellation procedures. After an one-stop business cancellation platform is launched, the time for business cancellation is expected to be halved. It's learned that the city's industry & commerce administration is working with tax, customs, financial and human resources authorities to build the online business cancellation platform, which is expected to be operational by the end of this year. After the platform opens, the time for business cancellations for Chinese companies will be reduced by 14 business days, and the time will be cut by 17 working days for foreign enterprises to be canceled.

The Ministry of Finance, the Ministry of Science and Technology and the State Administration of Taxation recently released the Circular about Increasing Pretax Deductions for R&D Expenses. According to the circular, if an enterprise spends R&D expenses that have yet to become intangible assets, the expenses can be deducted at a percentage of 175% between January 1, 2018 and December 31, 2020; if the R&D expenses have developed into intangible assets, the expenses shall be amortized at 175% of the asset cost in the period.

At a State Council executive meeting on September 18, 2018, Premier Li Keqiang stressed that the existing tax and fee reduction policies must be put in place as soon as possible, and policies on social security contributions should remain stable. The meeting decided that inspections should be conducted to examine whether these favorable policies have been fully and timely implemented. Based on the principle that corporate burdens would not increase, relevant authorities should not make radical policy changes to social security payments and must not ask employers and employees to make up for contributions they were supposed to make in the previous years. In the meantime, authorities should work out plans to reduce social security contributions. In order to expand opening up and maintain steady foreign trade growth, the meeting said new measures would be rolled out later this year, including cutting the time and cost of customs clearance, streamlining port services and improving the export tax rebate policy.