How to enjoy the R&D expense plus deduction policy?

In 2022, after the CPC Central Committee and the State Council issued new combined tax support policies according to the economic development situation, the State Administration of Taxation sorted out relevant tax preferential policies and measures around the main links and key areas of innovation and entrepreneurship, covering the entire life cycle of enterprises. Today, I will show you the policy of R&D expense deduction

Additional deduction of R&D expenses

【 Subject 】

Except for manufacturing and small and medium-sized technology-based enterprises, resident enterprises that have sound accounting, implement audit collection and can accurately collect R&D expenses. According to 75% enjoyment policy

[Preferential content]

1. During the period from January 1, 2018 to December 31, 2023, the R&D expenses actually incurred in the R&D activities of the enterprise that have not formed intangible assets are included in the current profits and losses, on the basis of the actual deduction according to the provisions, 75% of the actual amount will be added and deducted before tax.

2. During the period from January 1, 2018 to December 31, 2023, if the R&D expenses actually incurred in the R&D activities of enterprises form intangible assets, 175% of the cost of intangible assets shall be amortized before tax.

[Conditions for enjoyment]

The enterprise shall conduct accounting treatment for R&D expenditure in accordance with the requirements of the financial accounting system; At the same time, a subsidiary account is set up for the R&D expenses that enjoy additional deduction according to the R&D project, and the actual amount of various R&D expenses that can be added and deducted in the current year is accurately collected and accounted. If an enterprise conducts multiple R&D activities in a tax year, it shall collect the R&D expenses that can be added and deducted according to different R&D projects.

The enterprise shall calculate the R&D expenses and production and operation expenses separately, and collect all expenses accurately and reasonably. If the division is unclear, no additional deduction is allowed.

The expenses incurred when the enterprise entrusts an external institution or individual to carry out R&D activities shall be included in the R&D expenses of the entrusting party at 80% of the actual amount incurred and calculated as an additional deduction. Regardless of whether the entrusting party enjoys the policy of pre tax additional deduction of R&D expenses, the entrusted party shall not make additional deduction.

The actual amount of commissioned external research and development costs shall be determined according to the principle of independent transaction. If the entrusting party is associated with the entrusted party, the entrusted party shall provide the entrusting party with the details of R&D project expenses.

4. For projects jointly developed by the enterprise, each party shall calculate and deduct the R&D expenses actually borne by itself.

5. According to the actual situation of production, operation and scientific and technological development, the enterprise group can reasonably determine the allocation method of R&D expenses for projects with high technical requirements and large investment amount that need centralized R&D according to the principle of consistent rights and obligations, and matching cost expenditure and income sharing, and allocate them among the beneficiary member enterprises, which will be calculated and deducted separately by the relevant member enterprises.

6. The relevant expenses incurred by enterprises for creative design activities to obtain innovative, creative and breakthrough products can be added and deducted before tax according to regulations.

[Policy Basis]

1. Item (1) of Article 30 of the Enterprise Income Tax Law of the People's Republic of China

2. Article 95 of the Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China

3. Notice of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on Improving the Pre tax Plus Deduction Policy for Research and Development Expenses (CS [2015] No. 119)

4. Notice of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on Increasing the Pre tax Plus Deduction Ratio of Research and Development Expenses (CS [2018] No. 99)

5. Announcement of the Ministry of Finance and the State Administration of Taxation on Extending the Implementation Period of Some Preferential Tax Policies (No. 6 in 2021)

6. Announcement of the State Administration of Taxation on Issues Related to the Pre tax Plus Deduction Policy for Enterprise Research and Development Expenses (2015 No. 97)

7. Announcement of the State Administration of Taxation on Issues Concerning the Scope of Collection of Pre tax Plus Deductions of R&D Expenses (2017 No. 40)

8. Announcement of the State Administration of Taxation on Further Implementing the Policy of Additional Deduction of R&D Expenses (No. 28 in 2021)

100% additional deduction of enterprise income tax on R&D expenses of manufacturing enterprises

【 Subject 】

Manufacturing enterprises

[Preferential content]

Since January 1, 2021, if the R&D expenses actually incurred in the R&D activities of manufacturing enterprises have not formed intangible assets and are included in the current profits and losses, on the basis of actual deduction according to regulations, from January 1, 2021, 100% of the actual amount will be added and deducted before tax; If intangible assets are formed, they will be amortized at 200% of the cost of intangible assets before tax from January 1, 2021.

[Conditions for enjoyment]

1. The above-mentioned manufacturing enterprises refer to those enterprises whose main business is manufacturing business and whose main business income accounts for more than 50% of the total income in the year when they enjoy preferential treatment. The scope of manufacturing industry is determined in accordance with the Classification of National Economic Industries (GB/T 4574-2017). If the relevant national departments update the Classification of National Economic Industries, they shall follow its provisions. The total income shall be subject to the provisions of Article 6 of the Enterprise Income Tax Law.

2. Other policy caliber and management requirements for manufacturing enterprises to enjoy the policy of additional deduction of R&D expenses, in accordance with the Notice of the Ministry of Finance, the State Administration of Taxation, the Ministry of Science and Technology on Improving the Policy of Pre tax Additional Deduction of R&D Expenses (CS [2015] No. 119) The relevant provisions of the Notice of the Ministry of Finance, the State Administration of Taxation, the Ministry of Science and Technology on Relevant Policy Issues Concerning the Pre tax Deduction of Overseas Research and Development Expenses Entrusted by Enterprises (CS [2018] No. 64) and other documents shall be implemented.

[Policy Basis]

Announcement of the Ministry of Finance and the State Administration of Taxation on Further Improving the Pre tax Plus Deduction Policy for R&D Expenses (No. 13 in 2021)

100% additional deduction of enterprise income tax on R&D expenses of technology-based SMEs

【 Subject 】

Small and medium-sized technology-based enterprises

[Preferential content]

If the R&D expenses actually incurred in the R&D activities of small and medium-sized technology-based enterprises have not formed intangible assets and are included in the current profits and losses, on the basis of actual deduction according to regulations, from January 1, 2022, 100% of the actual amount will be added and deducted before tax; If intangible assets are formed, they will be amortized at 200% of the cost of intangible assets before tax from January 1, 2022.

[Conditions for enjoyment]

1. The conditions and management measures for technology-based SMEs shall be implemented in accordance with the Notice of the Ministry of Science and Technology, the Ministry of Finance, and the State Administration of Taxation on Printing and Distributing the Evaluation Measures for technology-based SMEs (GKFZ [2017] No. 115).

2. Small and medium-sized technology-based enterprises enjoy other policy caliber and management requirements of the pre tax deduction policy for research and development expenses, according to the Notice of the Ministry of Finance, the State Administration of Taxation, the Ministry of Science and Technology on Improving the Pre tax Deduction Policy for Research and Development Expenses (CS [2015] No. 119) The relevant provisions of the Notice of the Ministry of Finance, the State Administration of Taxation, the Ministry of Science and Technology on Relevant Policy Issues Concerning the Pre tax Deduction of Overseas Research and Development Expenses Entrusted by Enterprises (CS [2018] No. 64) and other documents shall be implemented.

[Policy Basis]

Announcement of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on Further Improving the Pre tax Plus Deduction Ratio of R&D Expenses of Small and Medium sized Technological Enterprises (No. 16 in 2022)

Additional deduction of entrusted overseas R&D expenses

【 Subject 】

Resident enterprises that have sound accounting, implement audit collection and can accurately collect R&D expenses.

[Preferential content]

The expenses incurred by entrusting overseas R&D activities shall be included in the entrusting party's overseas R&D expenses according to 80% of the actual expenses incurred. The part of the entrusted overseas R&D expenses that does not exceed two-thirds of the eligible domestic R&D expenses may be additionally deducted before enterprise income tax according to regulations.

[Conditions for enjoyment]

1. The actual amount of the above expenses shall be determined according to the principle of independent transaction. If the entrusting party is associated with the entrusted party, the entrusted party shall provide the entrusting party with the details of R&D project expenses.

2. When entrusting overseas R&D activities, a technology development contract shall be signed, and the entrusting party shall register with the science and technology administrative department. Relevant matters shall be implemented in accordance with the Administrative Measures for Technology Contract Recognition and Registration and the Technology Contract Recognition Rules.

3. The R&D activities entrusted overseas do not include those entrusted to overseas individuals.

[Policy Basis]

Notice of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on Relevant Policy Issues Concerning the Pre tax Deduction of Overseas Research and Development Expenses Entrusted by Enterprises (CS [2018] No. 64)

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