I. Deductions:
1. Public welfare donations: enterprises incur public welfare donations expenditure, within 12% of the total annual profits, are allowed to be deducted in the calculation of taxable income. Public welfare donations refers to enterprises through public welfare organizations or people's governments above the county level and its departments, for the "Chinese people's *** and the State Public Welfare Donation Law" stipulates the public welfare donations.
2, salary and wages expenditure: reasonable salary and wages expenditure incurred by enterprises are allowed to deduct. Wages and salaries, including basic salaries, bonuses, allowances, subsidies, year-end raises, overtime pay, and other expenses related to the employee's position or employment. It does not include the enterprise's employee welfare expenses, employee education expenses, labor union expenses, and social insurance premiums such as pension insurance premiums, medical insurance premiums, unemployment insurance premiums, industrial injury insurance premiums, maternity insurance premiums, and housing fund. The wages and salaries of enterprises that are state-owned may not exceed the limited amount granted by the relevant government departments; the excess shall not be included in the total wages and salaries of the enterprise or deducted in calculating the taxable income of the enterprise. "Reasonable wages and salaries" are governed by the following principles: (1) the enterprise has formulated a relatively standardized wage and salary system for its employees; (2) the wage and salary system formulated by the enterprise is in line with the industry and regional level; (3) the wages and salaries issued by the enterprise for a certain period of time are relatively fixed, and adjustments to the wages and salaries are made in an orderly manner; and (4) the wages and salaries actually issued by the enterprise are relatively fixed, and adjustments to the wages and salaries are made in an orderly manner. The enterprise has fulfilled its obligation to withhold and pay personal income tax on behalf of the individual in accordance with the law in respect of the wages and salaries actually paid. (5) Arrangements relating to wages and salaries are not made for the purpose of reducing or evading taxes;
3. Social insurance expenses (1) Basic insurance: basic social insurance premiums such as basic old-age insurance premiums, basic medical insurance premiums, unemployment insurance premiums, industrial injury insurance premiums, maternity insurance premiums, etc., which the enterprise pays for the employees in accordance with the scope and standard stipulated by the relevant competent department of the State Council or the people's government of the provincial level, and housing provident fund, are allowed to be deducted. (2) Supplementary medical care and supplementary pension: The part of supplementary pension insurance premiums and supplementary medical insurance premiums paid by an enterprise for all employees serving or employed by the enterprise in accordance with relevant state policies and regulations, respectively, not exceeding the standard of 5% of the total wages of the employees, shall be allowed to be deducted when calculating taxable income; the part exceeding the standard shall not be deducted. (3) Other insurance: personal safety insurance premiums and property insurance shall be deducted accordingly. In addition, in addition to the personal safety insurance premiums paid by the enterprise in accordance with the relevant provisions of the State for special types of workers and the State Council, the competent financial and tax authorities can be deducted other commercial insurance premiums (mandatory insurance: such as aviation accident insurance), the enterprise for the investor or the employee to pay the commercial insurance premiums, shall not be deducted.
4. Borrowing Costs: Reasonable borrowing costs incurred by enterprises in production and business activities that do not need to be capitalized are allowed to be deducted. (1) inter-enterprise borrowing: enterprises in the production and business activities incurred in the following interest expenses, are allowed to deduct: 1) non-financial enterprises to financial enterprises borrowing interest expenses, interest expenses on deposits of financial enterprises and interest expenses on interbank lending, interest expenses on the approved issuance of bonds; 2) non-financial enterprises to non-financial enterprises borrowing interest expenses, not exceeding the interest rate in accordance with the same period of the same type of loan interest rate of the financial enterprise portion of the amount calculated. (2) Enterprises borrowing from natural persons: the interest expenses of enterprises borrowing from shareholders or other natural persons who have a relationship with the enterprise, internal employees or other personnel are allowed to be deducted to the extent that the interest expenses do not exceed the amount calculated in accordance with the interest rate of the same type of loan of the financial enterprise for the same period of time. In addition, the enterprise actually paid to the related party interest expenses, its acceptance of the related party creditor's investment and its equity investment ratio: financial enterprises, 5:l; other enterprises, 2:1.
5, several expenses: (1) employee welfare expenses: the enterprise incurred employee welfare expenses, not exceeding 14% of the total wages and salaries are allowed to deduct the portion of the total wages and salaries. (2) trade union funds: the part of the trade union funds allocated by the enterprise, not exceeding 2% of the total wages and salaries, shall be deducted before the enterprise income tax with the "special receipt for trade union funds income" issued by the trade union organization. (3) Employee education expenses: the part of employee education expenses incurred by the enterprise not exceeding 2.5% of the total wages and salaries shall be allowed to be deducted; the part exceeding the total wages and salaries shall be allowed to be carried forward for deduction in the following tax years. Note: Employee education expenses of software production enterprises can be deducted according to the actual amount incurred in the calculation of taxable income. Employee education expenses incurred by recognized technologically advanced service enterprises are allowed to be deducted from the calculation of taxable income if they do not exceed 8% of the total wages and salaries; the excess is allowed to be carried forward for deduction in the subsequent tax years. (4) Business hospitality: business hospitality expenses incurred by the enterprise in connection with production and operation activities shall be deducted in accordance with 60% of the amount incurred, but the maximum shall not be more than 5 per cent of the current year's sales (operating) income. (5) Advertising and publicity expenses: qualified advertising and business promotion expenses incurred by the enterprise, not more than 15% of the current year's sales (operating) income is allowed to be deducted; more than part of the deduction is allowed to be carried forward in the subsequent tax year. Note: Advertising and business promotion expenses incurred by cosmetic manufacturing and sales, pharmaceutical manufacturing and beverage manufacturing enterprises are allowed to be deducted for the portion not exceeding 30% of the current year's sales (operating) income; the portion exceeding the portion is allowed to be carried forward for deduction in the subsequent tax years. Tobacco advertising and business promotion expenses of tobacco enterprises shall not be deducted in the calculation of taxable income.
6. Special Funds: Special funds extracted by enterprises for environmental protection and ecological restoration in accordance with relevant provisions of laws and administrative regulations are allowed to be deducted. No deduction shall be made for the change of use of the above special funds after they are withdrawn.
7, leasing expenses: the enterprise according to the needs of production and business activities to rent fixed assets to pay the lease payment, in accordance with the following methods of deduction: (1) leased fixed assets in the form of operating leases incurred in the leasing fee expenses, according to the lease term uniform deduction; (2) leased fixed assets incurred in the form of finance leases leasing fee expenses, in accordance with the provisions of the value of the fixed assets constituting a finance lease part shall be depreciated and deducted in installments.
8, labor protection expenditures: reasonable labor protection expenditures incurred by enterprises are allowed to be deducted.
9. Intra-organizational transactions: management fees paid between enterprises, rents and royalties paid between business establishments within an enterprise, and interest paid between business establishments within a non-banking enterprise shall not be deducted.
10, fees and commissions expenditure: enterprises incurring fees and commissions expenditure related to production and operation, not exceeding the following provisions within the calculation limit, are allowed to deduct; more than the part of the deduction shall not be allowed. (1) insurance enterprises: property insurance enterprises shall calculate the limit by 15% (including this number, the same hereinafter) of the balance of the total premium income of the year after deducting the surrender premiums, etc.; life insurance enterprises shall calculate the limit by 10% of the balance of the total premium income of the year after deducting the surrender premiums, etc. (2) Other enterprises: the limit is calculated at 5% of the amount of revenue recognized by service agreements or contracts signed with intermediary service agencies or individuals with legal business qualifications (excluding both parties to a transaction and their employees, agents and representatives, etc.). Enterprises are not allowed to include handling fee and commission expenses in rebates, business commissions, rebates, entrance fees and other expenses. Expenditures on handling fees and commissions that have been included in fixed assets, intangible assets and other related assets shall be deducted in installments through depreciation and amortization, and shall not be directly deducted in the period in which they are incurred.
11, exchange loss: enterprises in currency transactions, as well as the end of the tax year will be monetary assets and liabilities other than the RMB in accordance with the end of the period of the spot RMB exchange rate of the median price of the exchange loss arising from the conversion into RMB, in addition to the cost of the assets already included in the relevant and related to the distribution of profits to the owners of the portion of the deduction is allowed.
12. Deduction of employee clothing expenses: according to the nature and characteristics of the work of the enterprise, the enterprise uniformly produced by the enterprise and require employees to work in uniform clothing costs incurred, according to the provisions of Article 27 of the Regulations, can be deducted as a reasonable expenditure of the enterprise to be given before the tax deduction.
13. Asset loss: The asset loss allowed to be deducted before enterprise income tax refers to the reasonable loss incurred by the enterprise in the process of actual disposal and transfer of the said assets (hereinafter referred to as actual asset loss), and the reasonable loss incurred by the enterprise in the process of actual disposal and transfer of the said assets although the enterprise has not actually disposed of or transferred the said assets, but is in line with the "Circular of the Ministry of Finance and the State Administration of Taxation on the Policy of Pre-tax Deduction of Enterprise Asset Losses" (Cai Shui [2009] No. 57) (hereinafter referred to as the Circular). No. 57) (hereinafter referred to as the "Notice") and the loss recognized by calculating the conditions stipulated in the Administrative Measures for Pre-tax Deduction of Enterprise Asset Losses for Income Tax Purposes (hereinafter referred to as the statutory asset losses).
14. Start-up (preparatory) expenses: Enterprises may make a one-time deduction in the year of the date of commencement of business, or may treat them in accordance with the provisions of the new tax law on the treatment of long-term amortized expenses, but once selected, they shall not be changed. The period during which the enterprise is in preparation is not counted as a loss year.
15. Travel Expenses - Personal Accident Insurance Premium Expenditure: Personal accident insurance premium expenditure incurred by employees of an enterprise on official business trips by means of transportation is allowed to be deducted by the enterprise in the calculation of taxable income.
16, additional deduction: can be deducted when calculating taxable income: (1) research and development costs incurred in the development of new technologies, new products, and new processes; from January 1, 2017 to December 31, 2019, in accordance with 75% of the actual amount incurred in pre-tax additional deduction; the formation of intangible assets, in the above period in accordance with the cost of intangible assets, amortized before tax at 175%. (2) For the placement of disabled persons and other employed persons encouraged by the state to be placed, the deduction shall be added at 100% of the wages paid to the disabled employees.
17. Deduction of income: Income obtained by an enterprise by using resources specified in the Catalogue of Enterprise Income Tax Preferences for Comprehensive Utilization of Resources as the main raw materials for the production of products that are not restricted or prohibited by the state and conform to the relevant national and industry standards is reduced by 90% to the total income.
18, tax credits: (1) enterprises that purchase and actually use special equipment for environmental protection, energy and water conservation and safe production within the scope of the Catalogue of Enterprise Income Tax Preferences for Specialized Equipment for Environmental Protection, etc., can offset the current year's enterprise income tax payable by 10% of the investment in the special equipment; if the current year's tax payable is not sufficient for offsetting, the enterprise can carry over the tax payable to the following years, but the carry-over period shall not be more than five tax years. (2) Venture capital enterprises adopting equity investment can carry forward to the following years, but the carry forward period shall not exceed 5 tax years. (2) Venture capital enterprises taking equity investment in unlisted small and medium-sized high-tech enterprises for more than 2 years can offset the taxable income of the Venture capital enterprise in accordance with 70% of its investment in the year when the equity is held for full 2 years; if there is insufficient offset in the current year, it can be carried forward to the next tax year.
II. Tax Preferences
1. Exemptions: (1) Cultivation of vegetables, grains, potatoes, oilseeds, beans, cotton, hemp, sugar, fruits and nuts; selection and breeding of new crop varieties; cultivation of traditional Chinese medicinal herbs; cultivation and planting of forests; breeding of livestock and poultry; collection of forest products; irrigation, primary processing of agricultural products, veterinary medicine, agricultural extension, agricultural machinery operation and maintenance of agricultural, forestry, livestock and fishery services. , forestry, animal husbandry and fishery service projects; offshore fishing. (2) The tax refunded by software production enterprises under the policy of immediate refund of value-added tax shall be used by the enterprises for research and development of software products and expansion of reproduction, and shall not be regarded as taxable income for enterprise income tax and shall not be subject to enterprise income tax. (3) Operating cultural institutions converted into enterprises are exempted from enterprise income tax since the date of conversion and registration. The implementation period is from January 1, 2014 to December 31, 2018.
2. Half-reduced: cultivation of flowers, tea, and other beverage and spice crops; seawater aquaculture and inland aquaculture.
3. Other categories: (1) In a tax year, resident enterprises are exempted from enterprise income tax on the portion of their income from technology transfer that does not exceed 5 million yuan; the portion that exceeds 5 million yuan is subject to a half-reduced enterprise income tax. (2) (3) New software production enterprises in China are exempted from enterprise income tax for the first and second years, and halved enterprise income tax for the third to fifth years from the profit-making year after being recognized. Enterprises and public institutions purchasing software that meets the conditions for recognition of fixed assets or intangible assets can account for it in accordance with fixed assets or intangible assets, and its depreciation or amortization period can be appropriately shortened, with a minimum of 2 years, upon approval by the competent tax authorities. (4) The production equipment of integrated circuit production enterprises, approved by the competent tax authorities, its depreciation period can be appropriately shortened, and the shortest period can be 3 years. (5) Production enterprises with production line widths less than 0.8 micron (inclusive) for integrated circuit products, upon approval, shall be exempted from enterprise income tax for the first and second years from the year of profit-making, and shall be entitled to a 50% reduction in enterprise income tax from the third to the fifth years.
4. Tax Rate Category: (1) Qualified small and micro-profit enterprises shall be subject to a reduced enterprise income tax rate of 20%. Note: For small and micro enterprises with annual taxable income less than 500,000 yuan, the income is reduced by 50% of the taxable income. (2) High and new technology enterprises that need to be supported by the state are subject to a reduced enterprise income tax rate of 15%. (3) Key software production enterprises within the national planning layout, if they do not enjoy the tax exemption benefits in the current year, the enterprise income tax rate is reduced by 10%. (4) Recognized technologically advanced service enterprises shall be subject to a reduced enterprise income tax rate of 15%. (5) An integrated circuit production enterprise with an investment of more than RMB 8 billion or an integrated circuit with a line width of less than 0.25um may pay enterprise income tax at a reduced rate of 15%, of which, for an operating period of more than 15 years, it shall be exempted from enterprise income tax for the first year to the fifth year, and shall be entitled to a 50% reduction in enterprise income tax for the sixth year to the tenth year, starting from the year when it starts to make profits. (6) If a non-resident enterprise does not establish an organization or place in China, or if it establishes an organization or place but the income it derives is not physically connected with the organization or place it establishes, the applicable tax rate shall be 20% but the enterprise income tax shall be levied at a reduced rate of 10%. (7) Enterprises in encouraged industries in Guangdong Hengqin, Fujian Pingtan, Shenzhen Qianhai, and western regions shall be subject to a reduced enterprise income tax rate of 15%.
3. Tax-exempt Income and Non-taxable Income: Tax-exempt income includes (1) interest income from treasury bonds; (2) dividends, bonuses and other equity investment income among qualified resident enterprises; (3) dividends, bonuses and other equity investment income from resident enterprises by a non-resident enterprise that has set up an institution or a place in China that is physically connected with the institution or place; and (4) income from qualified income of non-profit organizations. Non-taxable income includes (1) financial allocations; (2) administrative fees and governmental funds collected in accordance with the law and included in the financial management; and (3) other non-taxable income prescribed by the State Council.
Four, may not be deducted items: (1) dividends, bonuses and other equity investment income payments to investors. (2) Enterprise income tax. (3) Late payment of taxes, fines, penalties and losses of confiscated property. (4) Donation expenses other than public welfare donations. (5) Sponsorship expenditure. It refers to various expenditures of non-advertising nature incurred by the enterprise which are not related to production and operation activities. (6) unauthorized reserve expenditures. It refers to the expenditure on the provision for asset impairment, risk provision and other reserves that do not comply with the provisions of the State Council's financial and taxation authorities. (7) Other expenditures not related to the acquisition of income.
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