China
China offers a wide range of Incentives for Innovation and R&D. The R&D superdeduction has
been renewed and even improved for manufacturing companies. In addition, TASC (Technologically
Advanced Service Companies) and HNTE (High and New Technology Enterprises) statuses offer
reduced taxation amongst other bonuses.
| China Standard |
China Manufacturing companies |
|
|---|---|---|
| 175% R&D superdeduction | 200% R&D superdeduction | |
| Benefit Overview
|
With a standard 25% corporate income tax rate, the extra 75% superdeduction allows a 18,75% standard generosity. | Considering the extra 100% superdeduction, the benefit results in a 25% average generosity. |
| Eligible Claim Period
|
Expenses incurred during fiscal year are claimed with the Corporate Income Tax sheet within five months after year end. The scheme is a superdeduction that reduces tax liability, with a 5 to 10 years of carry forward. | |
| Historical Background
|
Available since many years, the scheme has recently experienced a renewal until at least 2023, in addition to an increase in generosity for all companies and especially manufacturing companies. | |
| Ease of Application
|
The scheme is based on expenses and investments incurred in the fiscal year, but requires a high level of tracking R&D expenses. Claim is submitted upfront for approval. | |
| Regulating Body Policies
|
The claims can be assessed from both financial and technical / scientific aspects, at both local and regional levels, so discussions can be engaged in case of disagreements. Tax authorities have a 20% target for controlling claims. |
|
| Eligible Costs
|
Salaries and social costs for R&D employees (incl. Health, unemployment, pension, maternity costs) Materials, fuel and power, prototypes and trial models (incl. maintenance, samples adjustment, testing, repair) Depreciation allowances of R&D equipment including intangible assets – software, patent rights Design costs for new products Certificate cost for R&D result. |
|
| Issues to Consider
|
The formalism for demonstrating R&D is very demanding. It is hence very difficult to claim on an opportunistic approach, all R&D and Innovation being labelled upfront. | |