CMS, China | Chinese Tax Regulation Update | September 2022
Dear Sir or Madam,
Please find enclosed our update on the latest developments on Chinese Tax Law.
Kind regards,
CMS, China
Circular
Number |
Issuance
Date |
Effective
Date |
Topic |
What is new? |
Announcement [2022] No. 27 jointly released by the Ministry of Finance (“MOF”), the State Administration of Taxation (“SAT”) and the Ministry of Industry and Information Technology (“MIIT”) |
2022-09-18 |
2023-01-01 |
Extension of the Vehicle Purchase Tax ("VPT") exemption policy for new energy vehicles |
Taxpayers will continue to be exempt from VPT for purchasing new energy vehicles (“NEVs”) during the period from 1 January 2023 to 31 December 2023. The qualified NEVs are subject to the "Catalogue of NEV Models Exempt from VPT" published by the SAT and the MIIT.
The date of purchase of the NEVs refers to the date of issuance of a valid certificate such as a unified sales invoice for motor vehicles or a special customs duty payment certificate. |
| Announcement [2022] No. 28 jointly released by the MOF, the SAT and the Ministry of Science and Technology |
2022-09-22 |
2022-10-01 |
Increase of pre-tax deduction for supporting scientific and technological innovation |
The Announcement has further optimized the pre-tax deduction policy for the High and New Tech Enterprises (“HNTEs”) and the companies which are enjoying the 75% super-deduction of R&D costs currently. The following in the Announcement are worth attention:
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The costs of the equipment and appliances newly purchased by the HNTEs during the period from 1 October 2022 and 31 December 2022 can be fully deducted against the taxable income on a one-off basis and an additional super-deduction of 100% of the purchase costs is allowed. If the deductions above lead to tax losses of the company, the tax losses can be carried forward to the subsequent years for utilization according to the tax laws (e.g., the current tax law provides a 10-year tax loss recovery period for HNTEs). |
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For enterprises that currently enjoy a 75% super-deduction of R&D costs, the super-deduction ratio is increased to 100% for the period from 1 October 2022 to 31 December 2022. |
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The R&D costs of the fourth quarter of 2022 for income tax declaration can be calculated according to either the actual amount incurred for the fourth quarter or the actual amount of R&D costs incurred for the whole year 2022 multiplied by the proportion of the number of operating months during the period from 1 October 2022 to 31 December 2022 accounting for the number of actual operating months in 2022. |
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| Announcement [2022] No. 32 jointly released by the MOF and
the SAT |
2022-09-30 |
2022-01-01 |
Preferential tax policies regarding enterprises' funding support in basic research |
The Announcement has provided preferential tax policies regarding the funding expenditures incurred in basic research. The following in the Announcement are worth attention:
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The expenditures incurred by enterprises for qualified non-profit scientific and technological research and development institutions (the "sci-tech research institutions"), tertiary schools and governmental natural science funds for basic research can be fully deducted against the taxable income and an additional super-deduction of 100% of the expenditures is allowed. The funds received by qualified non-profit sci-tech research institutions and tertiary schools from enterprises, individuals and other organizations are exempt from Corporate Income Tax ("CIT"). |
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"Basic research" refers to the activities of expounding and testing various hypotheses, principles and laws by analyzing the characteristics, structures and interrelationships of objects. Such "basic research" does not include the research conducted overseas and the research in the fields of social sciences, arts or humanities. |
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Enterprises providing funds for basic research shall sign the relevant agreements or contracts which shall explicitly state that the funds will be used in the fields of basic research. Enterprises, qualified non-profit sci-tech research institutions, tertiary schools and governmental natural science fund management entities shall keep good record of such documents as the funding agreements or contracts and the relevant vouchers, in which the funding parties, the funded parties, the funding purposes (specifically indicated for basic research), funding amounts and other information shall be specified. |
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| Announcement [2022] No. 31 jointly released by the MOF and
the SAT |
2022-09-30 |
2022-08-01 |
Tax policies related to in-kind repayment of non-performing credit rights of banking institutions and financial asset management companies |
The Announcement has specified the tax policies to support banking institutions and financial asset management companies ("Qualified Institutions") to dispose non-performing credit rights. The following in the Announcement are worth attention:
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Banking institutions include commercial banks, rural cooperative banks, rural credit cooperatives, country banks, rural fund mutual societies and policy banks registered in the territory of the PRC. The "real estate obtained for debt repayment" and the "assets obtained for debt repayment" in this Announcement refer to the real estate or other assets according to the rulings from the people's courts or the arbitration decisions from the arbitration institutions. In particular, such real estate or other assets obtained by the financial asset management companies must be taken over from banking institutions for their non-performing credit rights. |
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A Qualified Institution as a general VAT payer can choose to calculate and pay 9% VAT based on the difference between the sales proceeds and the debt amount repaid in form of the real estate when the Qualified Institution disposes the real estate obtained for debt repayment. No special VAT invoices shall be issued to the purchaser for the portion of the disposal price corresponding to the debt amount previously repaid in form of the real estate. |
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Qualified Institutions are exempt from stamp duty for the contracts, the property transfer documents and the business account books involved in the process of receiving and disposing the assets obtained for debt repayment. Other counterparties involved should still pay stamp duty as required. Qualified Institutions are exempt from Deed Tax for receiving the assets obtained for debt repayment. Local governments can provide further reduction of Real Property Tax and Urban Land Use Tax imposed on the Qualified Institutions for the real estate obtained for debt repayment. |
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This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China.
For further information, please contact:
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This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China.
CMS, China
“CMS, China” should be understood to mean the representative offices in Mainland China of CMS Cameron McKenna Nabarro Olswang LLP, CMS Francis Lefebvre Avocats and CMS Hasche Sigle, working together. CMS, China is a member of CMS Legal Services EEIG, a European Economic Interest Grouping that coordinates an organisation of independent member firms. CMS Legal Services EEIG provides no client services. Such services are solely provided by the member firms in their respective jurisdictions.
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