Announcement on Matters Concerning the Optimization of the Enjoyment of Policies Regarding the Additional Deduction of Research and Development Expenses When Filing Tax Prepayment Returns

Document No.: Announcement No. 11 [2023] of the State Taxation Administration and the Ministry of Finance

Issued by: State Taxation Administration, Ministry of Finance of People’s Republic of China

Date of Issue: 2023-06-21

Status: Full text valid

In order to better support the innovation and development of enterprises, the matters concerning the optimization of the enjoyment of policies regarding the additional deduction of research and development expenses when filing tax prepayment returns are hereby announced as follows in accordance with the Enterprise Income Tax Law of the People’s Republic of China and its implementing regulations and other relevant provisions:

I. When an enterprise files an enterprise income tax prepayment return of the second quarter (prepayment on a quarterly basis) or June (prepayment on a monthly basis) in July, and this enterprise can accurately collect and check the R&D expenses, it may choose to enjoy the preferential policies regarding additional deduction of R&D expenses in the first half of this year on its own initiative in the light of the actual situation of its production and operation.

Where an enterprise does not choose to enjoy the preferences for the period of filing of tax prepayment returns of July, and this enterprise can accurately collect and check the R&D expenses during the filing of tax prepayment returns in October or the annual remittance & settlement, it may choose to enjoy such preferences in the period of filing of tax prepayment returns of October or annual remittance & settlement on its own initiative in the light of the actual situation of its production and operation.

II. When an enterprise files an enterprise income tax prepayment return of the third quarter (prepayment on a quarterly basis) or September (prepayment on a monthly basis) in October, and this enterprise can accurately collect and check the R&D expenses, it may choose to enjoy the preferential policies regarding additional deduction of R&D expenses in the first three quarters on its own initiative in the light of the actual situation of its production and operation.

Where an enterprise does not choose to enjoy the preferences for the period of filing of tax prepayment returns of October, and this enterprise can accurately collect and check the R&D expenses during the annual remittance & settlement, it may choose to enjoy such preferences in the period of annual remittance & settlement on its own initiative in the light of the actual situation of its production and operation.

III. To claim for additional deduction of R&D expenses under the mode of “actual occurrence, self-determination, application for enjoyment, and retention of relevant materials for future inspection” an enterprise shall, based on the R&D expenses actually incurred by the enterprise, calculate the amount of additional deduction on its own initiative, complete the Monthly (Quarterly) Enterprise Income Tax Prepayment Return of the People’s Republic of China (Category A) to enjoy tax preferences, and complete a Detailed Statement on the Preferences of Additional Deduction of Research and Development Expenses (A107012) based on information on R&D expenses eligible for additional deduction (first half year or first three quarters). The Detailed Statement on Additional Deduction of Research and Development Expenses (A107012) shall be retained for future inspection along with other materials as prescribed by relevant policies.

IV. This announcement shall come into effect on January 1, 2023. The Announcement of the State Taxation Administration on Matters Concerning Enterprises’ Enjoyment of Preferential Policies Regarding the Additional Deduction of Research and Development Expenses When Filing Tax Prepayment Returns (Announcement No. 10 [2022] of the State Taxation Administration) shall be abolished at the same time.

This announcement is hereby made.

Ministry of Finance of People’s Republic of China

State Taxation Administration

June 21, 2023