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BRICS Summit in Xiamen highlight: Exchange of tax information

Leaders of the BRICS’ nations - Brazil, Russia, India, China and South Africa, have gathered on 3-5 September in the Chinese city in Xiamen for their ninth annual summit. In addition, as a part of “BRICS Plus” concept, leaders of Egypt, Guinea, Mexico, Tajikistan and Thailand have also attended the conference.

  

Tax Incentives for High & New Technology Industries in China further enhanced and clarified

Under the China Enterprise Income Tax (“EIT”) Law, a resident enterprise may enjoy Research & Development (“R&D”) super deduction incentive, i.e. deduct 150% of qualifying R&D expenses actually incurred in computing its tax liability, if the expenses do not result in the creation of an intangible asset. If intangible asset is developed, the qualifying R&D expenses should be capitalized and amortized based on 150% of the actual qualifying R&D costs. Recently, various Chinese authorities jointly issued a circular to further extend the foregoing super deduction percentage from 150% to 175%, which is available to Small- and Medium-sized Science & Technology Enterprises (“SMSTE”) when computing their EIT liabilities for the period from 1 January 2017 to 31 December 2019. The additional deduction effectively lowers the taxable income of the SMSTE. Self-evaluation and voluntary reporting requirements have to be complied with by the SMSTE in order to enjoy the tax incentive.

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