China alert - Issue 14, June 2012
The Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly issued Cai Shui  No. 48 (Circular 48) on 30 May 2012, setting out the Corporate Income Tax (CIT) deduction rules for advertising and promotional expenses (A&P expenses) in certain industries or under certain business arrangements. Circular 48 provides that the deduction rules for A&P expenses contained in Cai Shui  No.72 (Circular 72) regarding selected industries will basically continue to apply; however, the deduction rules for allocated A&P expenses under certain arrangements have been adjusted. The CIT deduction rules for A&P expenses stipulated in Circular 72 came to an end on 31 December 2010. Circular 48 picks up where Circular 72 left off, taking effect from 1 January 2011 to 31 December 2015.