I. According to Article 4 and Article 6 of the Circular of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology on Improving the Policy of Pre-Tax Deduction of Research and Development Expenses (Cai Shui [2015] No. 119), since January 1, 2016, the following industries are not applicable to the pre-tax deduction policy.

Tobacco manufacturing industry.

2. Accommodation and catering industry.

3. Wholesale and retail trade.

4. Real estate industry.

5. rental and business services.

6. Entertainment industry.

7. Other industries specified by the Ministry of Finance and the State Administration of Taxation.

2. According to the provisions of Article 4 and Article 8 of the Announcement of the State Administration of Taxation on Relevant Issues Concerning the Policy of Adding Deductions to Enterprise Research and Development Expenses before Taxation (Announcement of the State Administration of Taxation No. 97 of 2015), the industries that are not applicable to the policy of adding deductions will be determined in accordance with the following method from the 2016 and the subsequent years of the Enterprise Income Tax remittance.

Enterprises that are not applicable to the pre-tax addition and deduction policy industries are those enterprises whose main business is the business of the industries listed above, and whose main business income in the year in which the research and development expenses are incurred accounts for 50% or more of the balance of the enterprise's total income calculated in accordance with the provisions of Article 6 of the Tax Law, less the non-taxable income and investment income (not included).

Expanded Information

This refers to a tax incentive measure that adds a certain percentage to the actual amount incurred as a deduction in calculating taxable income in accordance with the provisions of the tax law. For example, assuming that the tax law provides for 50% deduction of research and development costs, then if the actual expenditure on research and development costs for the development of new products in the year is 100 yuan, it can be deducted at 150 yuan (100 × 150%) to reflect the policy of encouraging research and development before the tax.

Simply put, it is the amount of actual expenditure that can be calculated as higher than the actual expenditure when calculating the enterprise income tax. Because the EIT is calculated on the basis of profit, and profit = income - expenditure, if more expenditure is allowed, then the EIT will be reduced.

The Enterprise Income Tax Law stipulates that research and development expenses incurred in the development of new technologies, products and processes can be added and deducted when calculating taxable income. Article 95 of the Regulations for the Implementation of the Enterprise Income Tax Law elaborates on this provision, making it clear that the additional deduction of research and development expenses refers to the research and development expenses incurred by an enterprise for the development of new technologies, new products and new processes, and if the expenses do not result in the formation of an intangible asset that is included in the current period's profit and loss, the enterprise shall deduct 75% of the research and development expenses on top of the actual deduction in accordance with the provisions of the law.

The formation of intangible assets, according to the cost of intangible assets amortized at 175%. In other words, according to whether the research costs are capitalized as a standard, in two ways to add deduction, but the total amount of pre-tax deduction is the same, that is, the actual incurred R & D costs of 175%. All high-tech enterprises can enjoy this tax incentives.

Enterprises that have placed disabled workers can deduct 100% of the wages paid to disabled workers in addition to the actual deduction of wages paid to disabled workers when calculating taxable income. Enterprises are allowed to make deductions for wages paid to disabled workers when making advance payment of enterprise income tax declarations; when making annual declarations and remittances of enterprise income tax at the end of the year, additional deductions will be calculated in accordance with the provisions of the first paragraph of this article.

Baidu Encyclopedia - Additional Deductions