In accordance with the provisions of the tax law in the development of new technologies, new products, new processes incurred in the research and development costs on the basis of the actual amount incurred, and then add a certain percentage as a deduction in the calculation of taxable income of a tax incentive policy.
For example, the tax law stipulates that research and development costs can be deducted at 150%, so if the actual expenditure on research and development costs for the development of a new product is 100 yuan in the same year, it can be deducted at 150 yuan (100 x 150%) before tax to encourage enterprises to increase their investment in research and development.
The State Administration of Taxation in May 2017 also issued Cai Shui [2017] No. 34, "Ministry of Finance, State Administration of Taxation, Ministry of Science and Technology on Improving the Proportion of Pre-tax Deduction for Research and Development Expenses of Science and Technology-based Small and Medium-sized Enterprises," in which it is clearly pointed out that:
The actual R&D expenses incurred by science and technology-based small and medium-sized enterprises in carrying out research and development activities, which do not result in the formation of an intangible asset to be included in the current period's profit and loss. On the basis of actual deduction in accordance with the regulations, during the period from January 1, 2017 to December 31, 2019, they will be further deducted in accordance with 75% of the actual amount incurred before tax;
If they form intangible assets, they will be amortized in accordance with 175% of the cost of the intangible assets before tax in the above period.
Extended information:
The pre-tax deduction for R&D expenses applies to resident enterprises with sound financial accounting and the ability to accurately attribute R&D expenses. The following three types of enterprises are not eligible for the additional deduction:
One is a non-resident enterprise.
The second is authorized levy enterprises.
Thirdly, enterprises with unsound financial accounting that cannot accurately attribute research and development expenses
Enterprises are eligible for additional deduction for their research and development activities. Enterprise research and development activities refers to research and development activities with clear objectives that are carried out continuously by an enterprise in order to acquire new knowledge of science and technology (excluding humanities and social sciences), to creatively utilize new knowledge of science and technology, or to substantively improve technology, processes, products (services). According to the definition, the enterprise research and development activities should satisfy three conditions at the same time: first, it is innovative, and has a role in promoting the technology and techniques of the relevant industries in the region;
second, it is valuable, and the enterprise has achieved valuable results through the R&D activities in terms of innovation in the technology, techniques, and products (services); and third, it is in line with the catalog, that is, Article 4 of the Document No. 116 of the State Taxation and Development [2008]. Third, it is in line with the catalogue, that is, Article 4 of the Document of State Taxation [2008] 116 stipulates that the R&D activities of the enterprise must be in line with the "High and New Technology Fields Supported by the State" and the "Guide to the Key Fields of the Current Priority Development of the Industrialization of High Technology (2007)" published by the National Development and Reform Commission.
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