From January 1, 2023, the following China tax changes applies to companies:
For those who purchased new equipment and appliances between October 1, 2022, and December 31, 2022, a lump sum deduction is allowed in the calculation of taxable income for the current year.
100% super-deduction before tax is allowed
Research and Development (R&D) Expenses
For companies that currently apply 75% of the pre-tax super-deduction rate for R&D expenses, the pre-tax super-deduction rate will increase to 100% for the period between October 1, 2022, and December 31, 2022.
Micro, Small and Medium-sized Companies
For those who purchased new equipment and appliances between January 1, 2022, and December 31, 2022, (with a unit value exceeding 5 million yuan), may voluntarily choose to deduct them before enterprise income tax, as according to certain unit value proportions.
Small and Micro-Profit Companies
Annual taxable income of small and micro-profit enterprises that does not exceed 1 million yuan, shall be reduced to 12.5% included in the taxable income. Enterprise income tax shall be paid at 20%. Therefore, the actual tax rate for annual taxable income that does not exceed 1 million is only 2.5%.
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