• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/15/2013

China - Expanded R&D-related expenses eligible for “super deduction” 

November 15: China’s Ministry of Finance and the State Administration of Taxation jointly issued guidance that broadens the scope of research and development (R&D) expenses that are eligible for the “super deduction.”

Circular 70 is intended to encourage enterprises to engage in R&D activities by allowing the following items to be considered for the R&D super deduction:

  • Basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, work injury insurance premiums, maternity insurance premiums and housing funds contributed by an enterprise for full-time employees exclusively engaged in R&D activities in accordance with the scope and standards stipulated by the state council or the provincial government
  • Expenses incurred for the maintenance, tuning, inspection, and repair of instruments and equipment used exclusively for R&D activities
  • Expenses incurred for the purchase of samples, prototypes, and general testing items that do not constitute fixed assets
  • Clinical trial expenses for development of new medicine
  • Expenses for evaluation of R&D results

Read a November 2013 report [PDF 369 KB] prepared by the KPMG member firm in China: Scope of R&D Expenses Eligible for Super Deduction Enlarged

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