• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/8/2014

China - Treatment of government or shareholder allocations, fixed-asset depreciation 

July 8:  China’s State Administration of Taxation issued guidance concerning the corporate income tax treatment of assets received by enterprises from government / shareholder allocations and the depreciation of fixed assets.

Announcement [2014] No. 29 (23 May 2014) concerns the corporate income tax treatment in five areas:

  • Assets received by enterprises from government allocations
  • Assets received by enterprises from shareholder allocations
  • Reserve provisions of insurance enterprises (read TaxNewsFlash-Asia Pacific)
  • Training expenses for operators of nuclear power plants
  • Depreciation of fixed assets

KPMG observation

In light of this guidance, enterprises may want to reconsider their strategy for certain planned investments or receipt of investments, and also review their current depreciation policy to identify any differences in the accounting treatment and tax treatment. In addition, taxpayers operating nuclear power plants may need to address their tax treatment of training expenses for operators.

Read a July 2014 report prepared by the KPMG member firm in China: New CIT Rules on Assets-related Expenses

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