Does the new tax law allow depreciation without salvage value

The new tax law allows depreciation without residual value. Enterprises of all types of fixed assets in the calculation of depreciation before the residual value should be estimated from the original price of fixed assets. Residual value should not be less than 10% of the original price; need to leave less or no residual value, subject to the approval of the local tax authorities. Cancel the approval of the above, the enterprise newly purchased and put into use fixed assets, before depreciation, the residual value of the temporary uniformly determined as 10%. For some fixed assets which can be foreseen that they cannot be sold at the end of their useful life, or have no value for sale, no residual value can be left.

Legal Basis

Article 59 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China*** and the State of China, depreciation of fixed assets calculated in accordance with the straight-line method is allowed to be deducted.

Enterprises shall calculate depreciation from the month following the month in which the fixed assets are put into use; for fixed assets that have ceased to be used, depreciation shall cease to be calculated from the month following the month in which they cease to be used.

Enterprises should be based on the nature and use of fixed assets, a reasonable determination of the estimated net residual value of fixed assets. Once determined, the estimated net residual value of fixed assets shall not be changed."