China: R&D “super deduction” and innovation zones | KPMG | GLOBAL

China: Enhancements to R&D “super deduction” and innovation zones

China: R&D “super deduction” and innovation zones

China’s State Council announced enhancements and improvements to the research and development (R&D) “super deduction” and to the innovation demonstration zones regime.


Related content

R&D “super deduction”

Beginning 1 January 2016, the revised R&D “super deduction” will provide for: 

  • An expanded scope of eligible R&D activities
  • A deduction allowed for previously unclaimed R&D expenses, over a preceding three-year period
  • Simplification of allocation and accounting of R&D expenses
  • Streamlined R&D validation procedures and post-filing management for the R&D “super deduction”
  • Additional expenses to be eligible for the R&D “super deduction” including expatriate fees, trial product testing, inspection fees, consulting fees, and cooperative or contract R&D-related costs

Innovation demonstration zones

The announcement provides that the preferential income tax policy as piloted in innovation demonstration zones will be expanded to all of China. Specifically:

  • There are new benefits for investments in high technology and new technology enterprises, effective 1 October 2015.
  • A corporate income tax exemption is available relating to income from certain technology transfers.
  • Individual income tax relating to stock options provided to scientific and technological personnel involved in a transformation project of new and high-tech achievement may be paid in instalments over a five-year period.


Read an October 2015 report prepared by the KPMG member firm in China: R&D Super Deduction and Innovation Demonstration Zones expanded and improved

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal