Summary of Deduction Items and Standard for CIT in China(To be Continued)

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Summary of Deduction Items and Standard for CIT in China(To be Continued)

 

No. Deduction Items Standard of Deduction/Proportion of Limit Remark
1 Employee’s salary Aactual salary amount Employment, reasonable salary amount
Additional 100% deduction Salary of disabled employees
2 Welfare 14% Gross salary of the employees
3 Employee’s education expenses 8% Gross salary of employees, the excess part can be carried forward in the following years
Full amount Operator training fees for nuclear power generation enterprise
Full amount Employee training fees for software enterprise
4 Labour union funds 2% Gross salary of the employees
5 Entertainment expenses MIN（60%，5‰） 60% of the acutal entertainment expense versus 5‰ of the sales revenue, the lower one is allowed to be deducted；The dividend, equity transfer income of equity investment enterprise can be calculated  as sales revenue
  Advertisement expenses & propaganda expenses 15% Sales revenue of current year, the excess part can be carried forward in the following years
30% Sales revenue of current year, including cosmetic manufacturing and sales enterprise, pharmaceutical manufacturing enterprise, beverage (alcohol excluded) manufacturing enterprise
Non-deductable Advertisement cost of tobacco enterprise
7 Donation 12% Annual profit(accounting profit); public welfare donation with official receipt
8 Interset expense(borrow money from enterprise) Actual amount(Non-affiliated enterprise get loan from financial enterprise) Non-financial business get loan from financial enterprise
Loan of same type within the same period ( loan between non-affiliated enterprises ) Non-financial business get loan from financial enterprise, the part of interest not exceeds the amount that calculated based on the interest rate of financial enterprise for loan of same type whthin the same period can be deducted, a statement of afore-mentioned situation is also required for the deduction.
Within 5 or 2 times of equity investment (loan between affiliated enterprises) Debt investment amount within 5 times of equity investment amount can be deducted for financial enterprise; Other enterprise shall not exceed 2 times.
Actual amount (Interest paid to domestic related party from affiliated enterprise) Provide documents to prove the transaction complies with the principle of independent transaction, or the actual tax burden is not higher than the domestic related party.

 

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