Employee pension insurance and unemployment benefits should be included in

Items and Standards for Pre-tax Deductions for Enterprise Income Tax (Trial)

In order to thoroughly implement the "Interim Regulations of the People's Republic of China on Enterprise Income Tax" and the "Provisional Regulations of the People's Republic of China on Enterprise Income Tax" The National Tax Collection and Management Law further regulates the management of corporate income tax bases and specifically formulates pre-tax deduction items and standards for corporate income tax.

Pre-tax deductions for corporate income tax (hereinafter referred to as deductions) refer to the costs, expenses and losses related to the taxpayer's income that are allowed to be deducted when calculating taxable income.

If the taxpayer's financial and accounting treatments are inconsistent with tax regulations, they should be adjusted in accordance with tax regulations. If they are within the standards of tax regulations, deductions are allowed. If the tax regulations are unclear and the financial accounting system has clear regulations, the "Accounting Standards for Enterprises", "General Financial Principles for Enterprises" issued by the Ministry of Finance and industry-specific financial and accounting systems (hereinafter referred to as the "two regulations" and industry financial accounting systems) shall be temporarily followed. Regulations are implemented and deductions are allowed. If there are no provisions in the taxation and financial accounting systems, the local tax bureau shall clarify the deduction items and deduction standards.

1. Deduction of inventory costs

Inventories refer to various tangible assets stored by taxpayers for sale or consumption during the production and operation process. Including raw materials, fuel, packaging, low-value consumables, commissioned processing materials, products in progress, finished products and commodities, etc.

Under the accrual basis principle, taxpayers shall calculate and resell the inventory costs of products in accordance with the "Two Rules" and the industry's financial accounting system regulations, and deductions are allowed.

2. Deductions from taxable wages

Taxable wages refer to the wage standards that are allowed to be deducted when calculating taxable income. Specifically, it includes basic wages, floating wages, various subsidies, allowances, bonuses, etc. paid by enterprises to employees in various forms.

(1) For taxpayers who have been approved to implement the performance-linked method, their wages shall be paid within a period when the growth rate of total wages is lower than the growth rate of economic benefits and the growth rate of average employee wages is lower than the growth rate of labor productivity. , it is forced to be deducted based on the actual withdrawal amount.

When the wages and benefit indicators linked to taxpayers' work efficiency need to be adjusted due to the impact of national policies, after the provincial local taxation bureaus uniformly determine the adjustment items at the end of the year, all localities can calculate the "two below" based on the adjusted benefit indicators. Taxable payroll deductions.

(2) For taxpayers who have not implemented work-efficiency linking, their taxable salary is within 550 yuan per capita per month, and shall be deducted according to the standards set by the municipal governments. If it is higher than 550 yuan per capita per month, the taxable salary shall be deducted according to RMB 550 is a standard deduction from taxable wages.

(3) The commission wages drawn by taxpayers in the catering service industry in accordance with national regulations are allowed to be deducted.

3. Deduction of fixed asset depreciation

Taxpayers shall follow the depreciation method stipulated in the Interim Regulations on Enterprise Income Tax and its Implementation Rules and the "Two Rules" and the industry's financial accounting system. The depreciation fees of fixed assets extracted over the depreciation period are allowed to be deducted. Special circumstances shall be handled in accordance with the following provisions:

(1) Accelerated depreciation of fixed assets shall be deducted in accordance with the following provisions

1. Taxpayers determine to improve technical specifications or solve industrial problems in order to verify and supplement relevant data. For pilot testing of key technologies for mass production and commercialization, after approval by the competent tax authorities, the depreciation life of pilot equipment can be accelerated by 30-50% based on national regulations.

2. National Electronic manufacturing companies, shipbuilding companies that have an important position in the economy and have rapid technological progress, machinery companies that produce "mother aircraft", aircraft manufacturing companies, automobile manufacturing companies, chemical production companies, and pharmaceutical production companies can use double balances for their machinery and equipment. Decreasing method or sum of years digits method.

3. If a taxpayer needs to shorten the depreciation period due to special reasons, on the premise of ensuring that the tax paid is not lower than that of the previous year, upon approval by the Provincial Local Taxation Bureau, the accelerated depreciation amount is allowed to be deducted, but the depreciation period It shall not be shorter than the following provisions:

(1) 20 years for houses and buildings;

(2) 10 years for trains, ships, machinery and other production equipment;

(3) Five years for electronic equipment and means of transportation other than trains and ships, as well as appliances, tools, furniture, etc. related to production and operation.

(2) The depreciation expenses of fixed assets (excluding land) that have been revalued and increased in value through asset verification organized by the state and withdrawn in accordance with regulations are allowed to be deducted.

(3) When taxpayers purchase mobile phones, if there are purchase control procedures, they can be managed as fixed assets and depreciated, and deductions are allowed.

IV. Deduction of fixed asset leasing fees

For fixed assets leased by taxpayers in the form of financial leases, the leasing fees shall be included in the depreciation expense and shall not be directly deducted. The handling fee paid by the lessee and the interest paid after installation and use can be directly deducted from the payment.

5. Deduction of expenses for transferring fixed assets

Expenses for transferring fixed assets refer to the newly incurred expenses of disassembly, relocation, arrangement, etc. when the taxpayer transfers or sells fixed assets. .

The expenses incurred by taxpayers in transferring fixed assets are allowed to be deducted.

6. Deduction of fixed asset improvement expenditures

Fixed asset improvement expenditures refer to the net expenditures incurred in the process of renovation and expansion to improve the quality and function of fixed assets, that is, all expenditures The difference in income from fixed asset price changes incurred during the renovation and expansion process is deducted.

Fixed asset improvement expenditures should be deducted in the following two situations.

(1) Expenditures for the improvement of taxpayers’ own fixed assets shall be treated as capital expenditures, and the original value of the fixed assets shall be increased and depreciated, and deductions shall be allowed.

(2) Taxpayers' expenditures on the improvement of leased fixed assets should be accounted for in the "deferred assets" account, and deductions should be allowed for write-offs based on the principle of the shorter of the lease validity period or the effective use period of the improvement project.

7. Deduction of amortization of intangible assets

Intangible assets refer to assets that are used by taxpayers for a long time and have no physical form. Including patented technology, non-patented technology, trademark rights, copyrights, land use rights and goodwill, etc.

(1) Taxpayers should calculate the intangible assets based on the actual cost when acquiring them.

1. Intangible assets invested by investors as capital or cooperation conditions shall be valued according to the amount confirmed by assessment or agreed in the contract agreement;

2. Intangible assets purchased shall be valued according to the actual amount The price paid shall be valued;

3. Intangible assets developed by oneself and acquired according to the law shall be valued according to the actual expenditure during the development process;

4. Intangible assets accepted as donations shall be valued according to the invoice. The amount listed in the bill or the market price of similar intangible assets shall be measured;

5. Except for enterprise mergers, goodwill shall not be recorded in the account at a price.

(2) Intangible assets should be amortized using the straight-line method, and deductions are allowed within the specified period:

1. Intangible assets transferred or invested, any legal, contract or corporate If the application stipulates a statutory validity period and a benefit period respectively, the determination shall be based on the shorter of the statutory validity period and the benefit period stipulated in the contract or application form.

2. If the law does not stipulate the effective period, the beneficial period shall be determined according to the contract or enterprise application form. If neither the law nor the contract or the enterprise application stipulates the validity period or the number of years of benefit, it shall be determined according to a period of not less than 10 years.

3. Computer software purchased separately is managed as intangible assets and amortized according to the effective period stipulated by law or the beneficial years stipulated in the contract; if the effective period or beneficial years are not stipulated by law or contract, it will be amortized within 5 years. Average amortization during the year.

8. Deduction of deferred assets

Deferred assets refer to various expenses incurred by the enterprise that cannot be fully included in the current year's profits and losses, but should be amortized in subsequent years. Including start-up expenses, fixed asset overhaul expenses and other deferred expenses with an amortization period of more than 1 year.

(1) Deduction of start-up expenses.

Start-up expenses refer to the expenses incurred during the preparation period of the enterprise. The preparation period refers to the expenses from the date the enterprise is approved for establishment to the date it starts production and operation (including trial production and trial operation). Including staff wages, office expenses, travel expenses, training fees, printing fees, registration fees, and summary profits and losses and interest expenses that are not included in the cost of fixed assets.

Start-up expenses should stop accruing when production and operation are started and operating income is obtained, and amortization should begin at the same time. They should be divided into management expenses in equal installments within a period of no less than 5 years, and deductions are allowed.

(2) Deduction of expenditures for overhaul of fixed assets. Expenditures for major repairs of fixed assets should be amortized evenly during the interval between major repairs, and deductions are allowed.

(3) Deduction of other deferred expenses. Other deferred expenses are amortized in equal installments according to the benefit period of the expense item, and deduction is allowed.

9. Deduction of simple construction fees

Simple construction fees are allowed to be deducted based on the actual amount within the standard of 200 yuan per square meter (including 200 yuan).

10. Deduction of mine maintenance fees

Mine maintenance fees included in the cost are allowed to be deducted. The specific standards are:

(1) Metal ores:

1. Non-ferrous metal ores:

Manganese ore is 9 yuan per ton

Magnesium ore is 5 yuan per ton

Chromium ore is 5 yuan per ton

Lode gold ore is 9 yuan per ton

Placer gold ore is 0.3 yuan per ton

8 yuan per ton in other non-ferrous mines, 7.2 yuan per ton in the open pit, 3 yuan per ton in placer mines

2. Ferrous metal mines:

Iron ore 6 yuan per ton Yuan

(2) Non-metallic minerals:

Clay mineral 7 yuan per ton

Fluorite 7 yuan per ton

Limestone per ton 2 yuan per ton

Dolomite 5 yuan per ton

Silica 5 yuan per ton

Pyroiron, boron, phosphorus, and alumite 7 yuan per ton

Yushan Stone Mine 1.5 yuan per ton

Asbestos, gypsum, graphite, talc ore 5 yuan per ton

Other non-metallic ores 5 yuan per ton

(3) Coal 10 yuan per ton

11. Deduction of insurance premiums

Taxpayers participating in property insurance and transportation insurance are allowed to deduct the insurance premiums paid in accordance with regulations.

Taxpayers are allowed to deduct statutory personal safety insurance premiums paid by employees in special types of work as stipulated by the state.

12. Deduction of travel expenses

If a taxpayer implements the lump sum method for travel expenses, after the lump sum method for travel expenses is approved by the competent tax authority, the travel expenses incurred within the lump sum standard are allowed to be deducted.

If the taxpayer does not formulate a lump sum method for travel expenses, it shall be deducted based on the actual amount with legal bills.

13. Deduction of Labor Protection Expenses

Taxpayers shall comply with the Liaoning Provincial Labor Bureau, Finance Department, and Taxation Bureau’s “Liaoning Provincial Employees’ Personal Labor Protection Equipment Distribution Standards” (Liaoning Labor Safety (1990) No. 79) Labor insurance expenses incurred when purchasing labor insurance supplies are allowed to be deducted. Among them, the annual per capita expenditure on labor insurance services within 150 yuan is allowed to be deducted. Labor protection supplies for special types of work must be purchased at labor insurance stores and will be deducted accordingly.

14. Deduction of heating expenses

The heating expenses paid directly by taxpayers to the heating department shall be deducted according to the standards set by the local government. Winter coal subsidies paid by taxpayers to employees of enterprises without heating equipment shall be deducted within the annual per capita standard of 150 yuan.

15. Deduction of heatstroke prevention and cooling fees

The heatstroke prevention and cooling fees paid by taxpayers to employees of their units shall be deducted within the annual per capita standard of 180 yuan.

16. Deduction of development fees for new products, new technologies, and new processes

New products, new technologies, and new processes developed by taxpayers must be listed in the city or above Various technical planning projects formulated by economic and trade committees or science and technology committees at all levels based on industrial policies or macro development outlines.

New products, new technologies, and new processes are divided into three levels: national, provincial, and municipal.

(1) Various expenses incurred by taxpayers to research and develop new products, new technologies, and new processes, including new product design fees, process specification formulation fees, equipment debugging fees, and experimental fees for raw materials and semi-finished products, Technical library materials fees, intermediate experimental fees not included in the national plan, salaries of research institution personnel, depreciation of research equipment, other funds related to trial production of new products, technical research and costs of entrusting other units to conduct scientific research and trial production are not subject to proportional restrictions. , included in administrative expenses and allowed to be deducted. If an enterprise obtains a special national appropriation for a new product, new technology, or new process project in the current year, the deduction amount for this expense shall be the balance after deducting the appropriation from the total actual expenditure.

(2) The various expenses incurred by profitable enterprises in researching and developing new products, new technologies, and new processes have increased by more than 10% (including 10%) compared with the actual amount incurred in the previous year. The actual amount incurred in the current year In addition to being expensed according to regulations, after being reviewed and approved by the competent tax authorities at the end of the year, 50% of the actual amount can be directly deducted from the taxable income of the year. If the increase does not reach more than 10%, no deduction will be allowed. buckle.

The research and development expenses incurred by loss-making enterprises can only be expensed according to the actual situation according to regulations, and the method of deducting a certain proportion of growth from taxable income is not implemented.

(3) If the research and development expenses of a profitable enterprise increase by more than 10% over the previous year, if 50% of the actual amount incurred is greater than the taxable income of the enterprise for the current year, it may not exceed the taxable income. The excess amount will be deducted; the excess amount will not be deducted in the current year and subsequent years.

(4) Key equipment and test instruments for trial production purchased by taxpayers for the purpose of developing new technologies and new products, if the single value is less than 100,000 yuan, can be allocated to management expenses in one lump sum or in installments, and it is allowed Deductions, those that reach the fixed asset standard should be managed separately, and no depreciation will be withdrawn.

17. Deduction of funds for schools for children of employees

The wages, bonuses, school office supplies, teaching supplies, travel expenses, and housing actually paid by taxpayers to the school staff for children of employees Deductions for rent, maintenance fees, water bills, electricity bills, etc. are allowed.

18. Deductions for trade union funds, employee welfare fees, and employee education funds

Taxpayers’ employee union funds, employee welfare fees, and employee education funds shall be deducted from taxable wages as allowed 2%, 14% and 15% of the total amount are calculated and deducted respectively.

If temporary workers recruited by seasonal production enterprises work for more than one production and operation cycle and have a labor contract issued by the labor department, the above provisions may be followed.

19. Deductions from employee pension insurance funds and unemployment insurance funds

Deductions from employee pension insurance funds and unemployment insurance funds withdrawn by taxpayers in accordance with relevant national regulations are allowed.

20. Deduction of funeral allowances for employee death

If an employee dies due to illness or not due to work, the funeral expenses will be paid based on the average monthly salary of employees in each city for three months; immediate family members The one-time relief payment will be paid based on the average monthly salary of employees in each city for 10 months; the regular relief payment for supporting immediate family members will be paid according to the employee hardship subsidy standard to support children until they are 18 years old and support parents who are not working until their death.

The above-mentioned expenses actually paid by taxpayers within the standards are allowed to be deducted.

21. Deduction of business entertainment expenses

For business entertainment expenses incurred by a taxpayer related to production and operation, the taxpayer shall provide accurate records or documents, respectively, within the following limits: Deduction:

If the annual operating income is within 15 million yuan (including 15 million yuan), it shall not exceed 5‰ of the annual operating income; if it exceeds 15 million yuan but is less than 50 million yuan (including 50 million yuan) ), it shall not exceed 3‰ of that part; if it exceeds 50 million yuan but is less than 100 million yuan (including 100 million yuan), it shall not exceed 2‰ of the operating income of that part; if it exceeds 100 million yuan, it shall not exceed that part. part of 1‰.

Operating income includes main business income and other business income. Among them, industrial enterprises calculate deductions based on net sales, which is the revenue after deducting sales allowances and sales discounts.

22. Deduction of litigation expenses

People’s Court litigation that taxpayers should pay according to the standards stipulated in the "Measures for People’s Court Litigation Fees" promulgated by the Supreme People’s Court Expenses, deductions allowed.

23. Deduction of housing subsidies

The housing subsidies and housing difficulty subsidies paid by taxpayers to employees in accordance with regulations shall be paid from the housing working capital fund. The housing provident fund paid by taxpayers (5% of the total employee wages) is included in the housing working capital fund, and the shortfall can be deducted before tax after being reviewed by the competent tax authorities. The housing provident funds paid by taxpayers without housing working capital funds to employees shall be deducted according to the actual amount.

24. Deduction of asset losses

If the taxpayer’s assets are destroyed or lost due to various irresistible reasons during the use and storage process, the tax Deductions are allowed after approval by the authorities:

(1) Losses on fixed assets. Including losses from operating, non-operating, construction-in-progress, and financing leased fixed assets.

(2) Loss of current assets. Including losses from inventories (including the value-added tax input tax transferred to be processed due to material damage), cash, other monetary funds, accounts receivable and prepayments, long-term investments, short-term investments, etc. Among them, bad debt losses and commodity price reduction losses are handled according to the following provisions:

1. Bad debt losses refer to accounts receivable that cannot be recovered due to the bankruptcy or death of the debtor and after the debtor's bankruptcy or inheritance has been paid off. Or accounts receivable that cannot be collected because the debtor has failed to perform its debt repayment obligations for more than three years. If taxpayers withdraw bad debt reserves in accordance with regulations (industrial and transportation enterprises shall accrue bad debt reserves at a rate of 3‰-5‰ of the balance of outstanding accounts receivable at the end of the year, and other industries shall accrue reserves within 3‰ of the balance of accounts receivable at the end of the year), they shall accrue bad debt reserves at the end of the year. The amount of bad debt provision is deducted from the calculation of administrative expenses. The amount of bad debt losses incurred by a taxpayer in the current year that exceeds the bad debt reserve shall be deducted after approval by the tax authorities. If a taxpayer does not establish a bad debt reserve, the bad debt losses incurred by the taxpayer shall be deducted after approval by the tax authorities. , deducted once or in installments based on the actual amount incurred in the current period.

2. Commodity price reduction reserves refer to the reserves set aside by commercial enterprises in accordance with regulations to make up for losses from commodity price reductions. Taxpayers can accrue commodity price reduction reserves on a monthly basis, and liquidate 3-5‰ of the inventory balance at the end of the year, which will be included in the cost of commodity sales for the current period, and deductions are allowed.

Deductions are not allowed if the taxpayer fails to complete the approval procedures for asset losses, the cause of the asset losses is unknown, and the losses are caused by personal malfeasance.

25. Deduction of compensation and liquidated damages

Taxpayers shall apply in accordance with the "Economic Compensation Measures for Violation and Termination of Labor Contracts" issued by the Ministry of Labor (Ministry of Labor [1994] 481 No.), the actual economic compensation paid to employees is allowed to be deducted.

26. Tax deductions

Deductions for consumption tax, business tax, urban maintenance and construction tax, resource tax, land value-added tax, education surcharge, etc. paid by taxpayers in accordance with tax regulations are allowed. .

27. Deduction of management fees

Management fees refer to the management fees paid by taxpayers to the head office or the competent department in accordance with regulations and related to the production and operation of the enterprise.

(1) Management fees paid by taxpayers to the head office after approval by the tax authorities are allowed to be deducted according to the following standards.

1. Payment based on a certain percentage of sales revenue upon approval. Among them, industrial enterprises can withdraw within 1% of the commodity sales revenue; commodity circulation enterprises can withdraw within 0.5% of the net commodity sales revenue; tourism and catering service enterprises can withdraw within 0.5% of the operating income; repair and repair enterprises can withdraw within 0.5% of the net sales revenue; repair and maintenance enterprises can withdraw within 0.5% of the net sales revenue. Withdrawal within 2% of operating income.

2. Payment according to the determined reasonable amount upon approval.

(2) Management fees paid by taxpayers to the competent authorities within 1% of their sales revenue or in a determined amount with the approval of the tax authorities are allowed to be deducted.

Management fees not paid by taxpayers during the annual corporate income tax settlement period are not allowed to be deducted.

28. Deduction of industrial and commercial management fees

Deduction of industrial and commercial management fees paid by private enterprises in accordance with the unified regulations of the industrial and commercial administrative departments is allowed.

29. Deduction of Employment Security Fund for Disabled Persons

Taxpayers shall deduct the amount of employment security fund as no less than the total number of employees on the job at the end of the previous year (including fixed workers, contract workers, temporary workers and unplanned employment). A proportion of 1.7% (including the number of people who have been arranged) is used to place disabled people into employment, and one blind or severely disabled person is counted as two disabled people.

If the taxpayer does not meet the proportion of employment placement for disabled people, the difference shall be paid at a standard of no less than 50% of the annual per capita salary of employees in the city where the taxpayer is located in the previous year. It is allowed. deduct.

30. Deduction of river maintenance fees

The river maintenance fees paid by taxpayers at a ratio of 1‰ of sales or operating income are allowed to be deducted.

31. Deductions of various charges and funds

The various internal and external funds, funds, and surcharges paid by taxpayers shall be collected with the approval of the State Council or the Ministry of Finance and shall be collected in accordance with regulations If it is included in the special fiscal account for extra-budgetary funds at the same level and is managed on two lines of revenue and expenditure, deductions are allowed.

The various fees paid by taxpayers shall be subject to the approval of the State Council or the Ministry of Finance in conjunction with relevant departments and the provincial people's government, and shall be included in the fiscal budget or extra-budgetary financial account at the same level according to regulations, and shall be collected. If the branch is managed by two lines, deduction is allowed.

Except as stipulated above, other in- and out-of-price funds, funds, surcharges and charges cannot be deducted.

32. Deduction of loan interest

Loan interest is deducted according to the following different circumstances: (1) Interest expenses incurred by taxpayers borrowing money from financial institutions, The amount of interest that should be withdrawn according to the interest rate specified by the bank is deducted.

(2) Interest expenses incurred by taxpayers borrowing from non-financial institutions shall be deducted at an amount not higher than the interest rate calculated by the People's Bank of China for similar loans during the same period.

(3) The penalty interest incurred by taxpayers on overdue loans is allowed to be deducted.

(4) Interest expenses incurred by taxpayers raising funds from employees shall be deducted at a standard annual interest rate of 10%. If the bank's loan interest rate for the same period is higher than 10%, the amount calculated based on the People's Bank of China's loan interest rate for the same period will be deducted.

33. Deduction of summary gains and losses

Exchange gains and losses refer to taxpayers’ foreign currency deposits, foreign currency cash, foreign currency claims, debts and other foreign currency accounts. Due to different accounting times and exchange rates, The resulting difference is converted into the accounting standard currency. The exchange gains and losses incurred by taxpayers should be included in the current profits and losses or the value of relevant assets according to different circumstances. Net exchange losses are allowed to be deducted.

(1) Exchange gains and losses incurred during the preparation period, if they are net losses, shall be included in the start-up expenses. If it is net income, it will be transferred to taxable income according to the straight-line method within 5 years starting from the month following the month of production and operation of the enterprise.

(2) Exchange gains and losses incurred during the production and operation period shall be included in the taxable income of the current period in accordance with the provisions of tax laws.

(3) Exchange gains and losses incurred during the liquidation period shall be included in the taxable income during the liquidation period in accordance with the provisions of the tax law.

(4) Exchange gains and losses related to the purchase and construction of fixed assets can be directly included in the cost of the asset if the asset has not yet been delivered for use or has been delivered for use but the final settlement of completion has not been processed.

34. Deduction of capital occupation fees

The capital occupation fees paid by taxpayers, if the asset owner and the taxpayer have an investment relationship, shall not be deducted before income tax; if it is a loan; For related purposes, the portion of the annual interest rate within 10% is allowed to be deducted.

35. Deduction of Advertising Fees

For advertising fees actually paid by taxpayers to promote the products and business projects of their units, if they obtain special advertising invoices supervised by the state tax authorities, they shall Deductions allowed.

36. Deduction of sales lump sum expenses

Industrial enterprises with sound financial management and capable of correctly calculating costs and expenses shall implement "sales lump sum" by institutions and personnel specializing in sales , after the lump sum plan is approved by the tax authorities, the lump sum fee is allowed to be deducted:

The "sales lump sum" fee is generally controlled within 3% of the taxpayer's sales revenue for the year. Individual taxpayers who need to increase the withdrawal ratio of the sales lump sum can make appropriate adjustments after approval by the Municipal Local Taxation Bureau.

"Sales lump sum" expenses include: wages, bonuses, various allowances and subsidies, overtime wages, travel expenses, telegraph and telephone charges, business negotiation meetings and other expenses related to the sales business.

The taxable wages of those who implement the "large sales contract" shall not be deducted repeatedly.

37. Deduction of commissions for foreign trade enterprises

Commission is an integral part of the price and a remuneration paid to middlemen. The commission paid by foreign trade enterprises to foreign enterprises or individuals is paid according to the commission rate and commission payment method stipulated in the export contract. There are generally three methods of paying commission: open commission, hidden commission, and accumulated commission.

The commission paid by the taxpayer can be deducted within 5% of the export transaction value based on the legal certificate issued by the payee.

38. Deduction of import and export commodity quota fees

Import and export commodity quota fees refer to the paid fees obtained by taxpayers in the import and export business of commodities subject to quota restrictions. Bidding expenditures paid to the China Chamber of Commerce for Import and Export for quota quotas. Quotas are divided into active quotas and passive quotas.

Taxpayers are allowed to deduct the import and export commodity quota fees paid according to the price stipulated in the bid.

39. Deduction of local income tax

When an investor distributes profits from a foreign-invested enterprise to pay back taxes, the foreign-invested enterprise shall calculate and pay 3% of the taxable income. Local income tax is allowed to be deducted by investors.

40. Deduction of Donations

Donations made by taxpayers for public welfare and relief are allowed to be deducted within 3% of the annual taxable income. The so-called public welfare and relief donations refer to donations made by taxpayers through non-profit social groups and state agencies in China to education, civil affairs and other public welfare undertakings, as well as to areas affected by natural disasters and poverty-stricken areas. The so-called social groups mainly refer to: China Youth Development Foundation, Project Hope Foundation, Soong Ching Ling Foundation, Disaster Reduction Committee, Red Cross Society of China, China Disabled Persons' Federation, and National Foundation for the Elderly.

The increased income found by the tax authorities during tax inspections shall not be used as the basis for calculating public welfare and relief donations.

No deduction is allowed for donations made directly by the taxpayer to the recipient.

41. Items that are not allowed to be deducted when calculating taxable income

(1) Capital expenditures. Refers to taxpayers’ expenditures on purchasing and constructing fixed assets and investing abroad. Expenditures on external investment include taxpayers’ investment in other units in the form of monetary funds, physical objects, unopened assets, etc.

(2) Intangible asset transfer and development expenditures. Refers to the expenses incurred by taxpayers in purchasing or developing intangible assets on their own and forming intangible assets.

(3) Various administrative penalty expenses

1. Fines for illegal operations and losses of confiscated property. Refers to the taxpayer's production and operation that violates national laws, regulations, and rules, and the fines imposed by relevant departments and the loss of confiscated property.

2. Late payment fees, fines and penalties for various taxes. Refers to late payment fees and fines imposed by tax authorities and fines imposed by judicial departments on taxpayers who violate tax regulations.

3. Other administrative penalty expenses

(4) Compensation for losses due to natural disasters or accidents. Refers to the compensation provided by the insurance company after taxpayers participate in property insurance and suffer natural disasters or accidents.

(5) Public welfare and relief donations and non-public welfare and relief donations that exceed the deduction allowed by state regulations. Refers to the taxpayer's portion that exceeds the scope of charitable and relief donations stipulated in the tax law and exceeds the annual taxable income within 3%.

(6) Various sponsorship expenditures. Refers to various non-advertising sponsorship expenditures.

(7) Guarantee loss expenses. Refers to taxpayers providing guarantees for other units that have nothing to do with the production and operation of the enterprise, and the taxpayers are responsible for losses due to the failure of the guaranteed party to perform the contract in accordance with the law.

(8) Various welfare expenditures. Refers to employee dormitory repair expenses, life insurance premiums, etc.

(9) Other expenses unrelated to obtaining income. Refers to other expenditures that have nothing to do with the taxpayer's income, in addition to the above items.

Extended reading: How to buy insurance, which one is better, and step-by-step instructions to avoid these "pitfalls" of insurance