01 Dec 2009

Deductions for Foreign Enterprises in China

by Darren

Since January 2008 the new enterprise income tax law has taken effect. This new law specifically identifies those items which are allowed as a deduction from your businesses gross income. Items which are deductible include:
  • Costs, expenses, taxes and losses incurred directly relating to the income you derive
  • Compensation paid to employees
  • Loan interest payments and related borrowing costs
  • Entertainment, advertising and promotional expenses
  • Depreciation of fixed assets
  • Exchange Losses
  • Leasing costs
  • Donations
  • Research and Development
  • Investment in venture capital enterprises
  • Tax losses
  • Foreign taxes
Items which are not deductible include:
  • Management fees between associated enterprises
  • Dividends paid to investors
  • Enterprise income tax payments
  • Surcharges on late payments
  • Fines and penalties
  • Sponsorship fees
We will analyze each of the deductible and non-deductible expenses in future blog entries.

Next entry: Specific Deductions Under The Income Tax Ordinance
Previous entry: Tax Deductions for small businesses in Singapore


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