Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Pre-tax Deduction Proof for Enterprise Income Tax Purposes

Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Pre-tax Deduction Proof for Enterprise Income Tax Purposes

Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Pre-tax Deduction Proof for Enterprise Income Tax Purposes

Announcement of the State Administration of Taxation [2018] No.28

June 6, 2018

To strengthen the administration of pre-tax deduction proof for enterprise income tax purposes, to standardize tax law enforcement practices and to create an optimal business environment, the State Administration of Taxation has formulated the Administrative Measures for Pre-tax Deduction Proof for Enterprise Income Tax Purposes, which are hereby promulgated.

The Announcement is hereby made.

Administrative Measures for Pre-tax Deduction Proof for Enterprise Income Tax Purposes

Article 1 The Measures (the "Measures") are enacted in accordance with the Law of the People's Republic of China on Enterprise Income Tax (hereinafter referred to as the "Enterprise Income Tax Law") and its implementing regulations, the Law of the People's Republic of China on the Administration of Tax Collection and its implementing rules, and the Administrative Measures of the People's Republic of China on Invoices and the implementing rules thereof to standardize the administration of the pre-tax deduction proof for enterprise income tax ("EIT") purposes (hereinafter referred to as the "pre-tax deduction proof").

Article 2 For the purpose of the Measures,"pre-tax deduction proof" refers to the various vouchers on the basis of which an enterprise can prove any reasonable expenses actually incurred by it in relation to its income and make any pre-tax deductions when calculating its taxable income for EIT purposes.

Article 3 For the purpose of the Measures, enterprises refer to resident enterprises and non-resident enterprises as defined in the Enterprise Income Tax Law and its implementing regulations.

Article 4 Pre-tax deduction proof shall be subject to administration in accordance with the principles of truthfulness, legality and correlation. Truthfulness means that the economic transactions reflected in any pre-tax deduction proof shall be truthful and the expenses as reflected therein shall have also been actually incurred; legality means that the form and source of any pre-tax deduction proof shall be in compliance with the relevant provisions of state laws and regulations; and correlation means that any pre-tax deduction proof shall correlate with and can validly prove the expenses reflected therein.

Article 5 Enterprises shall obtain pre-tax deduction proof for expenses incurred by them to be used as the basis to deduct the relevant expenses when they compute their taxable income for enterprise income tax purposes.

Article 6 Enterprises shall obtain their pre-tax deduction proof before the end of the period for final settlement of tax for the current year as prescribed in the Enterprise Income Tax Law.

Article 7 Enterprises shall maintain materials relating to their pre-tax deduction proof, including contracts and agreements, basis of expenses, payment vouchers, etc.
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