Article 43 The business hospitality expenses incurred by a taxpayer directly related to its business operations may be deducted according to the actual facts within the following prescribed ratios:
If the annual net sales (business) income is 15 million yuan and below, it shall not be more than 5 per cent of the net sales (business) income; if the annual net sales (business) income is more than 15 million yuan, it shall not be more than 3 per cent of that portion; if the annual net sales (business) income is more than 15 million yuan, it shall not be more than 3 per cent of that portion. million yuan, not more than 3‰ of the part.
Article 44 The taxpayer declares the deduction of business entertainment expenses, the competent tax authorities require the provision of supporting information, should provide sufficient valid certificates or information to prove the authenticity. If they cannot be provided, they shall not be deducted before tax.
Other pre-tax deduction standards are set forth in the Measures for Pre-tax Deduction of Enterprise Income Tax
The details are as follows:
Chapter I General Principles
Article 1 In accordance with the "Provisional Regulations of the People's Republic of China on Enterprise Income Tax and its Implementing Rules" ("the Regulations"), the "Rules" and the "Provisional Rules" shall apply to all business entertainment expenses incurred by taxpayers, Hereinafter referred to as "Regulations" and "Rules"), these Measures are formulated.
Article 2, Article 4 of the Regulations stipulates that the balance of the total income of a taxpayer for each taxable year minus the allowable deductions is the taxable income. Allowable deductions are all necessary and normal costs, expenses, taxes and losses incurred by the taxpayer in each taxable year in connection with the acquisition of taxable income.
Article 3 The deductions declared by taxpayers should be true and legal. Real means that it can provide appropriate evidence to prove that the relevant expenses have actually occurred; legal means that it is in line with the national tax regulations, and if the provisions of other laws and regulations are inconsistent with the provisions of the tax laws and regulations, the provisions of the tax laws and regulations shall prevail.
Article 4 In addition to the tax laws and regulations provide otherwise, the recognition of pre-tax deduction should generally follow the following principles:
(a) the principle of accrual. That is, the taxpayer should recognize the deduction when the expense is incurred rather than when it is actually paid.
(ii) Matching principle. That is, the expenses incurred by the taxpayer should be declared for deduction in the period in which the expenses should be matched or allocated. Taxpayers should declare the deductible expenses in a tax year shall not declare the deduction in advance or behind.
(C) the principle of relevance. That is, the taxpayer's deductible expenses must be related to the nature and source of the taxable income.
(d) the principle of certainty. That is, the taxpayer can deduct expenses regardless of when they are paid, the amount must be certain.
(v) The principle of reasonableness. That is, the method of calculation and allocation of deductible expenses of the taxpayer should be in line with general business routines and accounting practices.
Article 5 The expenses incurred by taxpayers must be strictly differentiated between operating and capital expenditures. Capital expenditures shall not be directly deducted in the period in which they are incurred, and must be depreciated, amortized or included in the cost of the relevant investment in installments in accordance with the provisions of tax laws and regulations.
Article 6 In addition to the provisions of Article 7 of the Regulations, the following expenditures shall not be deducted when calculating taxable income:
(1) illegal expenditures such as bribes;
(2) fines, penalties, and late fees paid for violation of laws and administrative regulations;
(3) reserve for decline in the value of inventory, reserve for decline in the value of short-term investments, reserve for impairment of long-term investments, and risk reserve fund (risk reserve fund). reserve, short-term investment reserve, long-term investment impairment reserve, risk reserve fund (including investment risk reserve fund), and any form of reserve other than those that can be withdrawn as stipulated by national tax regulations;
(d) Tax regulations have specific deduction ranges and standards (ratios or amounts), and the portion of the actual incurred expenses that exceeds or is higher than the statutory ranges and standards.
Article 7 The determination of the cost of each asset such as inventory, fixed assets, intangible assets and investments of a taxpayer shall follow the principle of historical cost. In the event of merger, demerger and capital structure adjustment and other reorganization activities of the taxpayer, the implied appreciation or loss of the relevant assets has been recognized and realized for tax purposes, the cost of the relevant assets can be determined according to the value after assessment and confirmation.
Chapter II Costs and Expenses
Article 8 Costs are the costs of taxpayers' sales of goods (products, materials, scraps, scrap, waste materials, etc.), provision of labor services, transfer of fixed assets, intangible assets (including technology transfer).
Article 9 Taxpayers must reasonably divide the costs incurred in business activities into direct costs and indirect costs. Direct costs are directly includable in the operating costs of the relevant costing objects or services, such as direct materials, direct labor. Indirect costs are multiple departments to provide services for the same cost object *** the same cost, or the same inputs can be manufactured, provide two or more products or services of the joint cost.
Direct costs can be charged directly to the operating costs of the relevant costing object or labor according to the relevant accounting documents and records. Indirect costs must be based on the cause and effect relationship with the costing object, the output of the costing object, etc., in a reasonable way to allocate the costing object in question.
Article 10 The various inventories of taxpayers shall be valued at the actual cost at the time of acquisition. The actual cost of the taxpayer's purchased inventory includes the purchase price, purchase costs and taxes.
Taxes included in the cost of inventories refer to consumption tax, customs duty, resource tax and input VAT that cannot be deducted from output tax incurred in purchasing, self-manufacturing or commissioned processing of inventories.
The cost of self-manufactured inventory for taxpayers includes overhead expenses such as manufacturing costs.
Article 11 The cost valuation methods for the issue or adoption of each inventory of a taxpayer may be individual valuation method, first-in-first-out method, weighted-average method, moving-average method, planned-cost method, gross margin method or retail price method. The LIFO method may also be used to determine the cost of inventory issued or received if the physical process of the inventory being used by the taxpayer is consistent with the LIFO method. Taxpayers using the planned cost method or retail price method to determine the cost of inventory or cost of goods sold, must be carried forward in a timely manner at the end of the year when filing tax returns cost differences or commodity purchase and sales differences.
Article 12 The costing method, indirect cost allocation method and inventory valuation method of a taxpayer shall not be changed at will once they are determined, and if they need to be changed, they shall be reported to the competent tax authorities for approval before the beginning of the next tax year. Otherwise, if the taxable income is affected, the tax authorities have the right to adjust.
Article 13 Expenses refer to the deductible selling expenses, administrative expenses and financial expenses incurred by a taxpayer in each taxable year, except for those expenses that have been included in the cost.
Article 14 The cost of sales is to be borne by the taxpayer for the sale of goods and the costs incurred, including advertising, transportation, loading and unloading costs, packaging costs, exhibition costs, insurance, sales commissions (can be directly identified as import commissions to adjust the cost of goods into the cost), the sale of commission, operating lease fees and sales department of the travel expenses incurred, wages, benefits and other costs.
Taxpayers engaged in the business of commodity distribution of purchased inventory to arrive at the warehouse before the packaging costs, transportation and miscellaneous expenses, transportation and storage process of insurance, loading and unloading costs, reasonable wear and tear during transportation and warehousing before the selection of the finishing costs of the purchase of goods can be directly accounted for in the cost of goods sold. If the taxpayer according to the accounting needs of the above purchase costs have been included in the cost of inventory, shall not be repeated in the name of selling expenses to declare the deduction.
The selling expenses of taxpayers engaged in real estate development business also include modification and repair costs, caretaking costs, heating costs and so on before the sale of development products.
The sales expenses incurred by taxpayers engaged in other businesses such as post and telecommunications have been included in the operating costs shall not be counted as sales expenses to repeat the deduction.
Article 15 of the administrative expenses of the taxpayer's administrative department for the management of the organization's business activities to provide support services and the costs incurred. Administrative expenses include the unified burden of the taxpayer's headquarters (company) funds, research and development costs (technology development costs), social security contributions, labor protection costs, business entertainment costs, labor union funds, employee education expenses, shareholders' meeting or board of directors fees, amortization of start-up costs, amortization of intangibles (including land use fees, compensation for land losses), mineral resources compensation, bad debt losses, stamp duties and other taxes, fire safety fees, sewage charges, greening fees, and so on. fees, sewage charges, greening fees, foreign affairs fees and costs for legal, financial, data processing and accounting affairs (consulting fees, litigation fees, fees for hiring intermediaries, trademark registration fees, etc.), as well as reasonable management fees paid to the head office (i.e., the head office of a head office of the same legal entity) in connection with its own profit-making activities. Unless approved by the State Administration of Taxation or its authorized tax authorities, taxpayers are not allowed to charge the management fees paid to their affiliates.
Headquarter expenses, also known as corporate expenses, include wages and salaries of headquarter executives, fringe benefits, travel expenses, office expenses, depreciation expenses, repair expenses, material consumption, amortization of low-value consumables and so on.
Article 16 Finance costs are expenses incurred by taxpayers to raise operating funds, including net interest expenses, net exchange losses, financial institution fees and other non-capitalized expenses.
Chapter III Wage and Salary Expenses
Article 17 Wage and salary expenses are all cash or non-cash labor remuneration paid by a taxpayer to employees who work in the enterprise or have employment relationship with the enterprise in each taxable year, including basic wages, bonuses, allowances, subsidies, year-end raises, overtime wages, and other expenditures in connection with the position or employment.
Area subsidies, price subsidies and missed meal allowances shall be treated as wage and salary expenses.
Article 18 The following expenditures incurred by a taxpayer shall not be regarded as expenditures on wages and salaries:
(1) Dividend income distributed as a result of employees' investment in the taxpayer;
(2) Social security contributions paid on behalf of employees in accordance with the provisions of the national or provincial government;
(3) Expenditures for various benefits paid out of the withdrawn Employee Welfare Fund (including employees' living hardship allowance, family visit travel expenses, etc.);
(iv) various labor protection expenditures;
(v) travel expenses and settling-in expenses for employees transferring to another job;
(vi) various expenditures for employees' retirement and retiring entitlements;
(vii) allowance for a single child;
(viii) housing provident fund borne by taxpayers;
(ix) Other items that the State Administration of Taxation (SAT) determines are not part of salary and wage expenses.
Article 19 Employees who work in the enterprise or have employment relationship with it include fixed workers, contract workers and temporary workers, except for the following:
(1) personnel of infirmaries, staff bathrooms, barber shops, kindergartens and nurseries which shall be charged to the employee welfare expenses withdrawn;
(2) retired employees who have already received old-age insurance pension and unemployment relief benefits, laid-off workers, employees to be laid off;
(c) management service personnel of housing that has been sold or rental housing whose rental income is included in the housing revolving fund.
Article 20 Unless otherwise specified, salary expenses are subject to taxable salary deduction, and the taxable salary deduction standard is implemented in accordance with the regulations of the Ministry of Finance and the State Administration of Taxation.
Article 21 The taxpayers who have been approved to implement the efficiency linkage method of salary and wages paid to employees, the food service industry in accordance with the state regulations and issued commission wages, can be deducted according to the facts.
Chapter IV Depreciation or Amortization of Assets
Article 22 The depreciation expenses of fixed assets used in the business activities of taxpayers, and the amortization expenses of intangible assets and deferred assets can be deducted.
Article 23 The valuation of fixed assets of a taxpayer shall be carried out in accordance with the provisions of Article 30 of the Rules. After the value of fixed assets has been determined, it generally shall not be adjusted except in the following special cases:
(i) liquidation of assets under the unified regulations of the State;
(ii) dismantling of a part of a fixed asset;
(iii) permanent damage to a fixed asset, which may be adjusted to the recoverable amount of the fixed asset and recognized as a loss after examination and approval by the competent tax authorities;
(iv) Adjustment of the original provisional valuation based on the actual value or discovery of errors in the original valuation.
Article 24 The scope of depreciation of fixed assets for taxpayers shall be as provided in Article 31 of the Rules. Unless otherwise provided, the following assets shall not be depreciated or amortized:
(1) housing sold to individual employees and housing leased to individual employees and the rental income is not included in the total income but is included in the housing revolving fund;
(2) self-generated or purchased goodwill;
(3) acceptance of donations of fixed assets, intangible assets.
Article 25 Unless otherwise provided, the minimum years for depreciation of fixed assets shall be as follows:
(1) 20 years for houses and buildings;
(2) 10 years for trains, ships, machinery, machines and other production equipment;
(3) 5 years for electronic equipment and means of transportation other than trains and ships, as well as appliances and utensils related to production and operation, tools, furniture, etc. for five years.
Article 26 For the promotion of scientific and technological progress, environmental protection and the state to encourage investment in key equipment, as well as perennial vibration, ultra-intensive use or acid, alkali and other strong corrosive state of the machinery and equipment, there is a need to shorten the depreciation period or take accelerated depreciation method, the taxpayer to submit an application by the local tax authorities in charge of the examination and verification, and then reported to the State Administration of Taxation at all levels for approval.
Article 27 The calculation of depreciation of fixed assets deductible by taxpayers shall be based on the straight-line depreciation method.
Article 28 The value of intangible assets purchased by a taxpayer includes the purchase price and related expenses incurred in the purchase process.
Taxpayers who develop intangible assets on their own should accurately collect the research and development costs, which have been directly deducted as research and development costs at the time of the occurrence of the intangible assets, the use of the intangible assets, and shall not be amortized in installments.
Article 29 The land concession price paid by the taxpayer to the state or other taxpayers for the acquisition of land use rights shall be managed as an intangible asset and amortized equally over a period of time not shorter than the period of use specified in the contract.
Article 30 The software attached to the computer hardware purchased by a taxpayer, which is not separately valued, shall be merged into the computer hardware and managed as a fixed asset; the software, which is separately valued, shall be managed as an intangible asset.
Article 31 The taxpayer's fixed asset repair expenditure can be directly deducted in the period in which it occurs. The fixed asset improvement expenditure of a taxpayer may increase the value of fixed assets if the relevant fixed assets have not been fully depreciated; if the relevant fixed assets have been fully depreciated, they may be treated as deferred expenses and amortized equally over a period of not shorter than five years.
Fixed asset repairs meeting one of the following conditions shall be considered as fixed asset improvement expenditures:
(i) the repair expenditures incurred amount to more than 20% of the original value of the fixed assets;
(ii) the economic useful life of the assets concerned has been extended by more than two years after the repairs;
(iii) the repaired fixed assets have been utilized for a new or different purpose. (iv) the fixed asset is used for a new or different purpose.
Article 32 The cost of a taxpayer's foreign investment shall not be depreciated or amortized, nor shall it be directly deducted as an expense of the current period of the investment, but it may be subtracted from the income from the transfer of property obtained when the relevant investment assets are transferred or disposed of, and the income or loss from the transfer of property shall be calculated accordingly. amortization of ancillary costs incurred in arranging the borrowings;
(iv) differences arising from foreign currency borrowings related to funds borrowed as an adjustment to interest expense.
Article 34 The operating borrowing costs incurred by taxpayers can be directly deducted if they meet the conditions set by the regulations on the qualification of interest levels. Borrowings incurred for the acquisition, construction and production of fixed assets and intangible assets, the borrowing costs incurred during the period of acquisition and construction of the assets concerned shall be included in the cost of the assets concerned as capital expenditures; borrowing costs incurred after the delivery and use of the assets concerned may be deducted in the period in which they are incurred. If the taxpayer does not specify the purpose of the borrowing, the borrowing costs should be reasonably calculated according to the proportion of funds occupied by operating activities and capital expenditures, and should be included in the cost of the assets concerned and the borrowing costs that can be directly deducted.
Article 35 Taxpayers engaged in real estate development business for the development of real estate and borrowing funds incurred by the borrowing costs incurred before the completion of real estate, shall be included in the development costs of the real estate.
Article 36 If the amount of loan obtained by a taxpayer from a related party exceeds 50% of its registered capital, the interest expenses on the exceeding part shall not be deducted before tax.
Article 37 The borrowing costs incurred by a taxpayer for the funds borrowed for foreign investment shall be included in the cost of the investment concerned, and shall not be deducted before tax as the taxpayer's operating expenses.
Article 38 Where a taxpayer acquires fixed assets from a lessor by way of operating lease, its rent in line with the principle of independent taxpayer transactions can be evenly deducted according to the time of benefit.
Article 39 A taxpayer who acquires fixed assets from a lessor by way of finance lease shall not deduct its rental expenses, but may draw depreciation expenses according to the provisions. A finance lease is a lease that transfers in substance all the risks and rewards associated with the ownership of an asset.
A lease that meets one of the following conditions is a finance lease:
(i) ownership of the leased asset is transferred to the lessee at the end of the lease term;
(ii) the lease term is for a majority of the asset's useful life (75% or more);
(iii) the minimum lease payments over the lease term are greater than or substantially equal to the fair value of the asset at the inception date of the lease.
Chapter VI Advertising and Business Entertainment Expenses
Article 40 Taxpayers incurring advertising expenses not exceeding 2% of their sales (business) income in each tax year may deduct the expenses according to the actual amount; the excess may be carried forward indefinitely to the subsequent tax years. No pre-tax deduction shall be made for advertising expenses of grain-based liquor. Taxpayers due to industry characteristics and other special reasons really need to increase the proportion of deduction of advertising expenses, must be reported to the State Administration of Taxation for approval.
Article 41 Taxpayers shall declare the deduction of advertising expenses strictly differentiated from sponsorship expenses. The advertising expenses declared by taxpayers for deduction must meet the following conditions:
(1) the advertisements are produced through specialized agencies approved by the industry and commerce departments;
(2) the expenses have been actually paid and corresponding invoices have been obtained;
(3) the advertisements have been disseminated through certain media.
Article 42 The business publicity expenses (including advertising expenses not through the media) incurred by a taxpayer in each taxable year may be deducted within the range of not exceeding 5‰ of the sales operating income.
Article 43 The business entertainment expenses incurred by a taxpayer directly related to its business operations may be deducted within the following prescribed ratios:
The annual net sales (operating) income of 15 million yuan and below, not exceeding 5 per cent of the net sales (operating) income; the annual net sales (operating) income of more than 15 million yuan, not exceeding 3 per cent of the portion of the net sales (operating) income. 3‰.
Article 44 The taxpayer declares the deduction of business entertainment expenses, the competent tax authorities require the provision of supporting information, shall provide sufficient valid certificates or information to prove the authenticity. If they cannot be provided, they shall not be deducted before tax.
Chapter VII Bad Debt Losses
Article 45 Bad debt losses incurred by taxpayers shall, in principle, be deducted according to the actual amount incurred. Upon reporting to the tax authorities for approval, bad debt reserves may also be withdrawn. Bad debt losses incurred by taxpayers who have withdrawn bad debt reserves shall be deducted from the bad debt reserves; the actual bad debt losses incurred in excess of the bad debt reserves withdrawn may be directly deducted in the period in which they occur; the recovery of bad debts that have been written off shall correspondingly increase the taxable income of the current period.
Article 46 The approval of the taxpayers can withdraw bad debt reserve, unless otherwise specified, the bad debt reserve withdrawal ratio shall not exceed 5 ‰ of the balance of accounts receivable at the end of the year. The accounts receivable at the end of the year for which provision for bad debts has been made are the sums due from the customers who purchased the goods or the customers who received the services, including the transportation and miscellaneous charges advanced on behalf of the taxpayers, due to the sale of goods, products or provision of labor services. Accounts receivable at year-end include the amount of notes receivable.
Article 47 Accounts receivable of a taxpayer that meets one of the following conditions shall be treated as bad debts:
(i) the debtor is declared bankrupt or revoked according to law, and its remaining property is really insufficient to settle the accounts receivable;
(ii) the debtor is dead or has been declared dead or disappeared according to law, and his or her property or estate is really insufficient to settle the accounts receivable;
(iii) The debtor suffers from a major natural disaster or accident, the loss is huge, and the accounts receivable that really cannot be settled with its property (including insurance compensation, etc.);
(iv) The debtor overstays its obligation to repay the debt, and the accounts receivable that is really unable to be settled by the court's ruling;
(v) The accounts receivable that has been overdue for more than 3 years is still uncollected;
(vi) Accounts receivable that have been approved by the State Administration of Taxation's approval of the write-off of accounts receivable.
Article 48 No bad debt provision shall be made for claims receivable of taxpayers incurring non-purchase and sale activities and any current accounts between related parties. Nor shall any current accounts between related parties be recognized as bad debts.
Chapter VIII Other Deductions
Article 49 The basic pension insurance premiums, basic medical insurance premiums, basic unemployment insurance premiums paid by taxpayers to the tax authorities, labor and social security departments or their designated agencies for all employees in accordance with state regulations, the employment guarantee premiums for the disabled paid in accordance with the standards confirmed by the provincial tax authorities, and the statutory personal safety insurance paid for special types of employees in accordance with state regulations can be deducted. Personal safety insurance, can be deducted.
Article 50 Life insurance or property insurance taken out by taxpayers for their investors or individual employees with commercial insurance organizations, as well as supplementary insurance taken out for their employees in addition to the basic insurance, shall not be deducted.
Article 51 Taxpayers' payment of consumption tax, business tax, resource tax, customs duty and product sales tax and surcharge such as urban maintenance and construction fee and education surcharge, as well as property tax, vehicle and vessel use tax, land use tax and stamp duty incurred can be deducted.
Article 52 Reasonable travel expenses, meeting expenses and board of directors' fees incurred by taxpayers in connection with their business activities shall be able to provide legal vouchers proving their authenticity if the competent tax authorities request for the provision of supporting information, otherwise, they shall not be deducted before tax.
Proof of travel expenses should include: name of the traveler, location, time, task, payment vouchers and so on.
Meeting expenses should include: meeting time, location, attendees, content, purpose, cost standards, payment vouchers.
Article 53 The commission incurred by the taxpayer meets the following conditions, can be included in the cost of goods sold:
(a) there are legal and authentic certificates;
(b) the object of payment must be independent taxpayers or individuals entitled to engage in intermediary services (the object of payment excludes the employees of the enterprise);
(c) commissions paid to the individual, in addition to other provisions, shall not exceed 5% of the amount of services. , shall not exceed 5% of the amount of services.
Article 54 Reasonable labor protection expenditures actually incurred by a taxpayer are deductible. Labor protection expenditure refers to the expenditure incurred on equipping or providing employees with working clothes, gloves, safety protection items, heat-prevention and cooling items, etc., which are really necessary for work.
Article 55 The net loss of assets incurred by a taxpayer, less the compensation of the responsible person and the insurance compensation, can be deducted after examination by the competent tax authorities. The property losses incurred by taxpayers in the sale of employee housing shall not be deducted.
Article 56 Taxpayers in accordance with the provisions of the economic contract to pay liquidated damages (including bank penalties), fines and litigation costs can be deducted.
Chapter IX Supplementary Provisions
Article 57 In accordance with these Measures and the relevant tax regulations, matters that need to be examined and approved by the tax authorities for pre-tax deduction, the provincial tax authorities may make provisions requiring the taxpayers to attach the examination and approval certificates of the certified tax accountants or certified public accountants of China when submitting the reports for examination and approval by the tax authorities.
Article 58 These Measures shall be implemented from January 1, 2000 onwards.
Article 59 If the previous provisions are inconsistent with these Measures, they shall be implemented in accordance with these Measures. Matters not provided for in these measures, in accordance with the relevant provisions.
Article 59