The State Council executive meeting held on March 24 arranged the implementation of policies such as raising the ratio of the additional (super) deduction for R&D expenses of manufacturing enterprises, in order to incentivize enterprise innovation and promote industrial upgrading.
In recent years, the preferential tax policy of the additional (super) deduction for R&D expenses has been steadily strengthened, effectively promoting enterprise innovation. To implement the measures in the Government Work Report for supporting enterprise innovation, the meeting decided to raise the ratio of the additional deduction for R&D expenses of manufacturing enterprises from 75% to 100%, effective January 1 this year. This means that for every RMB 1 million an enterprise invests in R&D, RMB 2 million can be deducted from its taxable income. Implementing this policy is expected to bring enterprises an additional RMB 80 billion in tax cuts this year, on top of last year’s tax cuts of more than RMB 360 billion. This institutional arrangement is the most substantial policy among this year’s structural tax cuts.
The meeting also proposed reforming the settlement and accounting method for the additional (super) deduction for R&D expenses. Enterprises will be allowed to choose to claim the additional deduction on a half-yearly basis, so that R&D expenses incurred in the first half of the year can be deducted at the time of prepayment in October of the same year, rather than at the annual income tax settlement in the following year, allowing enterprises to benefit as early as possible. At the same time, tax support policies for science and technology R&D service enterprises and “mass entrepreneurship and innovation” enterprises will be studied.
Pan Baochun, Chairman of Hefei Royalstar Electronic Appliance Group Co., Ltd., said that since 2014 the company has invested more than RMB 48 million in R&D and has enjoyed combined incentives totaling more than RMB 23 million, including the preferential income tax treatment for High-tech Enterprises and the additional (super) deduction for R&D expenses. He noted that the further strengthening of tax incentives such as the additional deduction for R&D expenses has bolstered the company’s determination to increase its investment in innovation.
“Policy measures such as raising the ratio of the additional (super) deduction for R&D expenses of manufacturing enterprises fully demonstrate the state’s determination to support the development of the real economy and provide a solid guarantee for innovation and R&D by enterprises, especially small and medium-sized enterprises. We must ensure that market entities enjoy all the benefits they are entitled to, so that the innovative vitality of enterprises can be fully unleashed,” said Ma Bin, full-time Vice President of the China Association of Small and Medium Enterprises.
(Source: Xinhua News Agency / China Construction Machinery Association)
