Title: Over 2,900 Enterprises in Chongqing Benefit from New R&D Expense Deduction Policy, Saving 2.7 Billion Yuan in Corporate Income Tax
Release Date: August 8, 2023
In a bid to promote innovation and support research and development (R&D) initiatives, Chongqing has implemented new regulations on the deduction of R&D expenses, resulting in substantial benefits for hundreds of enterprises. According to data released by the Chongqing Municipal Taxation Bureau on August 7, a total of 2,947 eligible enterprises have successfully reduced or exempted their corporate income tax by more than 2.7 billion yuan.
One noteworthy aspect of the policy is the advancement of the time to enjoy the pre-tax super deduction for R&D expenses to the second quarter. This adjustment has effectively activated companies’ liquidity and provided them with greater financial flexibility. Enterprises that choose to declare prepayment of corporate income tax in July can now avail of the super deduction policy of R&D expenses in advance.
The pre-tax deduction of R&D expenses is a crucial policy measure aimed at promoting innovation-driven development. On June 21 of this year, the State Administration of Taxation and the Ministry of Finance further optimized the policy by introducing a new declaration period in July annually. Starting from 2023, this earlier declaration period allows companies to enjoy the super deduction policy of R&D expenses three months ahead, easing their financial burden and encouraging innovation.
Among the enterprises that have benefited from the new policy, private enterprises accounted for 92.1% in terms of the number of beneficiaries and 60.4% in terms of the deducted amount. Out of the top 100 enterprises enjoying the largest super deduction, 67 were private enterprises, with the top six also being private enterprises.
Chongqing’s manufacturing industry, software and information technology service industry, and scientific research and technical service industry were the top three sectors that benefited from the new R&D expense deduction policy. Approximately 94.5% and 95.9% of enterprises in these industries, respectively, experienced an increase compared to the previous year, with a rise of 2.9 and 0.3 percentage points. Notably, the manufacturing industry accounted for 64.3% and 82.4% of all R&D enterprises based on the number of beneficiaries and investment amount, highlighting its importance to the real economy.
The Chongqing tax department has reminded enterprises that did not opt for the preferential treatment during the prepayment declaration period in July to correct their declaration forms for the second quarter before September 30. This will allow them to supplement the preferential deduction of R&D expenses for the first half of the year. For enterprises unable to accurately collect and calculate R&D expenses at present, they can choose to enjoy the benefits either during the prepayment declaration in October or during the annual settlement and payment of the following year based on their actual production and operation conditions.
The implementation of the new regulations on the additional deduction of R&D expenses reflects the government’s commitment to stimulating innovation and supporting business growth. Chongqing’s efforts have not only alleviated financial pressure on enterprises but also encouraged them to invest further in research and development, thus contributing to the city’s overall economic development.