Summary of Deduction Items and Standard for CIT in China

Summary of Deduction Items and Standard for CIT in China(Continued 2)

No.	Deduction Items	Standard of Deduction/Proportion of Limit	Remark
32	Unverified provision	Non-deductable
33	Depreciation of fixed assets	Deductable within the prescribed scope	Not exceed the minimum period of depreciation
34	Depreciation of productive biological assets	Deductable within the prescribed scope	10 years for woods, 3 years for livestock
35	Amortization of intangible assets	Amortization period not less than 10 years	General intangible assets
		Amortizion based on the period stipulated by the law or contract	Intangible assets obtained from investment or purchase
		Non-deductable	Goodwill created by the enterprise itself
		Non-deductable	Intangible assets irrelated to the business operation
36	Long term deferred expense	Deductable within the limit amount	1. The amortization for reconstruction expenses of buildings that have been fully depreciated shall be apportioned according to the estimated useful life
			2. The amortization for reconstruction expenses of leased building shall be apportioned according to the estimated useful life
			3. The amortization for fixed assets repair expenses shall be apportioned according to the estimated useful life
			4. For other long-term deferred expenses, the amortization period shall not be less than 3 years
37	Organization costs	Deductable	Deduct one-time in the year of commencement of operation or amortized as long term deferred expense
38	Amortization of low value articles	Actual amount
39	Audit and notarial fees	Actual amount
40	R&D expense	Additional deduction	Additional deduction is allowed in annual CIT declaration for incurred R&D expense within the prescribed sope
41	Taxes	Deductable	CIT and VAT can’t be deducted
42	Consulting and legal costs	Actual amount
43	Business trip expense	Actual amount
44	Meeting expense	Actual amount	Meeting minites and other supporting documents are required
45	Work dress expense	Actual amount
46	Transportation, installation, packing and other expenses	Actual amount
47	Printing expense	Actual amount
48	Courier and mail expense	Actual amount
49	Rental expense	Actual amount
50	Water and electricity expense	Actual amount
51	Heating/cooling costs	Calculated as welfare	Adjustment is needed when the welfare amount exceed the statutary standard
52	Fuel costs of vehicle and vessel	Actual amount
53	Allowances for employees for transportation and meal	Actual amount
54	Repair and maintenance fees	Actual amount
55	Security expense	Actual amount
56	Expenses of board of directors	Actual amount