Announcement No. 46 of the State Taxation Administration, 2018
The implementation issues of the policy of deduction of relevant corporate income tax for equipment and appliance are hereby announced as follows according to the Enterprise Income Tax Law of the People's Republic of China and its implementation regulations (hereinafter referred to as the Enterprise Income Tax Law and its implementation regulations) and the Circular of the Ministry of Finance and State Taxation Administration on the Policy of Deduction of Relevant Corporate Income Tax for Equipment and Appliance (CS No. 54-2018):
1. For equipment and appliance newly purchased by an enterprise from January 1, 2018 to December 31, 2020 and with a unit value of less than CNY 5 million, it is allowed to deduct the one-time period cost when calculating the income tax payable, with depreciation no longer calculated by year (hereinafter referred to as the one-time pre-tax deduction policy).
(1) The "equipment and appliance" refer to the fixed assets other than the buildings and structures (hereinafter referred to as "fixed assets”); the "purchase" refers to the purchases made in the form of currency or self-construction, in which the fixed assets purchased in the form of currency include the fixed assets purchased and used. For fixed assets purchased in the form of currency, the unit value shall be determined based on the purchase price, relevant taxes paid and other expenditures directly attributable to the asset to reach the intended purpose; for fixed assets self-constructed, the unit value shall be determined based on the expenditures incurred before completion settlement.
(2) The purchase time point of fixed assets shall be confirmed according to the following principles: for fixed assets purchased in the form of currency, it shall be confirmed at the time of invoicing except the purchase in installment or on credit; for fixed assets purchased in installment or on credit, it shall be confirmed based on the arrival time of fixed assets, and; for fixed assets self-constructed, it shall be confirmed based on the completion settlement time.
2. A one-time pre-tax deduction is made for the fixed assets in the year immediately following the month, in which the assets are put into use.
3. Where the enterprise chooses to enjoy the one-time pre-tax deduction policy, the tax treatment of its assets may be inconsistent with the accounting treatment.
4. Enterprises may choose to enjoy the one-time pre-tax deduction policy according to their own production and business accounting needs. In case of not choosing such policy, no changes shall be made in the following years.
5. Enterprises shall go through the relevant procedures for enjoying the policies in accordance with the Announcement of State Taxation Administration on Issuance of the Measures for Handling Preferential Policy Matters of Corporate Income Tax revised (Announcement No. 23 of the State Taxation Administration, 2018), with the following reference materials:
(1) Data on the time point of fixed assets purchased (such as the invoice for purchase of fixed assets in the form of currency, description of arrival time of fixed assets purchased in installment or on credit, description of final settlement of account for fixed assets self-constructed);
(2) Accounting voucher of fixed assets;
(3) Standing book checking the difference between tax treatment and accounting treatment of assets.
6. It is announced that the fixed assets with a unit value of more than CNY 5 million shall be subject to the Enterprise Income Tax Law and its implementation regulations, the Circular of the Ministry of Finance and State Taxation Administration on Improving the Corporate Income Tax Policy on Accelerated Depreciation of Fixed Assets (CS No. 75-2014), the Circular of the Ministry of Finance and State Taxation Administration on Further Improving the Corporate Income Tax Policy on Accelerated Depreciation of Fixed Assets (CS No. 106-2015), the Announcement of State Taxation Administration on Relevant Issues of Tax Policy on Accelerated Depreciation of Fixed Assets (Announcement No. 64 of the State Taxation Administration, 2014), the Announcement of State Taxation Administration on Relevant Issues of Further Improving the Corporate Income Tax Policy on Accelerated Depreciation of Fixed Assets (Announcement No. 68 of the State Taxation Administration, 2015), etc.
State Taxation Administration
August 23, 2018