China to provide tax deduction for R&D in IC, machine tool industry – document

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China will provide tax deductions for R&D expenditures incurred by integrated circuit (IC) companies and machine tools enterprises, aiming to encourage R&D and innovation and promote high-quality development in the two industries, according to a document issued by the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission (NDRC), and the Ministry of Industry and Information Technology.

Actual R&D expenses incurred by the companies that have not formed intangible assets and are included in the profit and loss will be deducted on the basis of actual deduction and then deducted by 120% of the actual amount incurred from 1st January 2023 to 31st December 2027, before tax, it said.

If the R&D expenses have formed intangible assets, they will be amortised before tax by 220% of the cost of the intangible assets during the said period, it said.