What is the policy of additional deduction of R D expenses?

What R&D expenses can be deducted?

Legal analysis: the scope of application of the R&D expense plus deduction policy.

1. Except for tobacco manufacturing, accommodation and catering, wholesale and retail, real estate, leasing and business services, and entertainment, all other enterprises can enjoy the benefits.

2. Systematic activities with clear objectives that enterprises continue to carry out in order to obtain new knowledge of science and technology, creatively apply new knowledge of science and technology, or substantially improve technology, products (services) and processes.

The following activities are not eligible for pre-tax deductions:

1.Routine upgrades of enterprise products (services).

2.The direct application of a scientific research achievement, such as the direct use of a disclosed new process, material, device, product, service or knowledge.

3.Technical support activities provided by companies to customers after commercialization.

4.Repetitive or simple changes to existing products, services, technologies, materials, or processes.

5.Market research, efficiency survey, or management research.

6.As an industrial (service) process link or routine quality control, testing and analysis, repair and maintenance.

7.Studies in the social sciences, arts, or humanities.

Legal basis: Article 1 of the Announcement on Further Improving the Pre-tax Deduction Policy for R&D Expenses (Announcement No. 13 of 2021 of the Ministry of Finance and the State Administration of Taxation) If the R&D expenses actually incurred by manufacturing enterprises in R&D activities are not included in the current profit or loss as intangible assets, they will be deducted before tax according to 100% of the actual amount from January 1, 2021 on the basis of deduction according to the regulations; If intangible assets are formed, they will be amortized before tax at 200% of the cost of intangible assets from January 1, 2021.

The term "manufacturing enterprise" in this article refers to an enterprise with manufacturing business as its main business and the proportion of its main business income in the total income in the year in which it enjoys preferential treatment reaches more than 50%. The scope of the manufacturing industry is in accordance with the Industrial Classification of the National Economy (GB T?).4574-2017) determined that if the relevant state departments update the "Industrial Classification of the National Economy", from its provisions.

The total income shall be implemented in accordance with Article 6 of the Enterprise Income Tax Law.

Article 2 When an enterprise prepays and declares the enterprise income tax in the third quarter of the current year (quarterly prepayment) or September (monthly prepayment), it can choose to enjoy the preferential policy of additional deduction for R&D expenses in the first half of the year, and adopt the method of "self-judgment, declaration and enjoyment, and retention of relevant information for future reference".

Eligible enterprises can calculate the amount of additional deduction by themselves, fill in the "People's Republic of China Enterprise Income Tax Monthly (Quarterly) Prepayment Tax Return (Class A)" to enjoy tax incentives, and fill in the "R&D Expenses Additional Deduction Preferential Schedule" (A107012) according to the R&D expenses enjoying the additional deduction (first half of the year). The "R&D Expenses Additional Deduction Preferential Schedule" (A107012) shall be retained together with other information stipulated in relevant policies for future reference.

If an enterprise does not choose to enjoy the preferential policy of additional deduction of R&D expenses when applying for the prepayment declaration in the third quarter or September, it can enjoy it in the following year when handling the final settlement.

Legal analysis: According to the provisions of the Regulations for the Implementation of the Enterprise Income Tax Law of China, if the R&D expenses of an enterprise are not recorded in the current profit or loss as intangible assets, they can be deducted, and on this basis, 50% of the R&D expenses will be deducted; If an intangible asset is formed, it shall be amortized at 150% of the cost of the intangible asset.

Legal basis: Article 95 of the Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China The additional deduction of R&D expenses referred to in Article 30 (1) of the Enterprise Income Tax Law refers to the R&D expenses incurred by the enterprise for the development of new technologies, new products and new processes, and if the intangible assets are not included in the current profit or loss, 50% of the R&D expenses shall be deducted according to the actual deduction in accordance with the regulations; If an intangible asset is formed, it shall be amortized at 150% of the cost of the intangible asset.

Legal analysis: If the R&D expenses actually incurred by the enterprise in R&D activities are not included in the current profit or loss as intangible assets, on the basis of deduction according to the regulations, 75% of the actual amount will be deducted before tax during the period from January 1, 2018 to December 31, 2021; If an intangible asset is formed, it shall be amortized before tax at 175% of the cost of the intangible asset during the above-mentioned period.

Legal basis: Article 8 of the Law of the People's Republic of China on the Administration of Tax Collection and Collection of Taxpayers and withholding agents have the right to learn from the tax authorities about the provisions of the national tax laws and administrative regulations and the circumstances related to the tax payment procedures.

Taxpayers and withholding agents have the right to request the tax authorities to keep the information of taxpayers and withholding agents confidential. The tax authorities shall keep the information of taxpayers and withholding agents confidential in accordance with the law.

Taxpayers have the right to apply for tax reduction, exemption and refund in accordance with the law.

Taxpayers and withholding agents have the right to make statements and defenses against the decisions made by the tax authorities; In accordance with the law, they enjoy the right to apply for administrative reconsideration, file administrative lawsuits, and request state compensation.

Taxpayers and withholding agents have the right to accuse and report violations of law and discipline by tax authorities and tax personnel.

In accordance with the provisions of the tax law, on the basis of the actual amount of research and development expenses incurred in the development of new technologies, new products and new processes, a certain proportion is added as the deduction amount when calculating the taxable income. For example, the tax law stipulates that R&D expenses can be deducted by 175%, and if the actual R&D expenses of a coarse fruit enterprise in the current year are 100 yuan, it can be deducted before tax at 175 yuan (100 175%), so as to encourage enterprises to increase R&D investment. The R&D activities of enterprises can enjoy additional deductions.

Enterprise R&D activities refer to the R&D activities with clear objectives that enterprises continue to carry out in order to obtain new knowledge of science and technology (excluding humanities and social sciences), to creatively apply new knowledge of science and technology, or to substantially improve technologies, processes, products (services). According to this definition, the R&D activities of enterprises should meet three conditions at the same time: first, they should be innovative and promote the technology and technology of relevant industries in the region; Second, it is valuable, and the enterprise has achieved valuable results through innovation in technology, process and product (service) through R&D activities; Third, in line with the catalogue, that is, Article 4 of the State Administration of Taxation 2008 No. 116 stipulates that the R&D activities engaged in by enterprises must comply with the "High-tech Fields Supported by the State" and the "Guidelines for the Key Areas of High-tech Industrialization (2007)" issued by the national government and other departments.

Legal analysis: If the R&D expenses actually incurred by the enterprise in R&D activities are not included in the current profit or loss as intangible assets, on the basis of deduction according to the regulations, 75% of the actual amount will be deducted before tax during the period from January 1, 2018 to December 31, 2021; If an intangible asset is formed, it shall be amortized before tax at 175% of the cost of the intangible asset during the above-mentioned period. In recent years, the preferential tax policy of additional deduction of R&D expenses has been increasing, which has effectively promoted enterprise innovation.

In order to implement the best work report to support enterprise innovation, the meeting decided that from January 1 this year, the additional deduction ratio of R&D expenses of manufacturing enterprises will be increased from 75% to 100%, which is equivalent to 2 million yuan can be deducted from the taxable income for every 1 million yuan invested in R&D expenses of enterprises. The implementation of this policy is expected to reduce taxes by 80 billion yuan for enterprises this year on the basis of last year's tax reduction of more than 360 billion yuan. This institutional arrangement is the most powerful policy in this year's structural tax cuts.

The meeting also proposed to reform the R & D expenses plus deduction and settlement accounting method, allowing enterprises to choose to enjoy the additional deduction on a half-year basis, and the R & D expenses in the first half of the year will be deducted from the next year's income tax final settlement to the prepayment in October of the current year, so that enterprises can benefit as soon as possible.

Legal basis: Interim Regulations of the People's Republic of China on the Administration of Tax Collection

Article 6 Any taxpayer who is engaged in production and business operation, implements independent economic accounting, and has been approved by the administrative department for industry and commerce to start a business shall, within 30 days from the date of obtaining the business license, declare to the local taxation authorities for tax registration. Other units and individuals with tax liabilities shall, with the exception of those who are not required to go through tax registration in accordance with the provisions of the tax authorities, declare to the local tax authorities for tax registration within 30 days from the date of becoming statutory taxpayers in accordance with the provisions of the tax laws and regulations.

Article 8 Taxpayers applying for tax registration shall submit an application registration report and relevant approval documents, and provide relevant documents at the same time. After examining the reports, documents and certificates in the preceding paragraph, the in-charge taxation authorities shall register them and issue them with tax registration certificates. The tax registration certificate can only be used by taxpayers and cannot be lent or transferred.