Circular of the Ministry of Finance and the State Administration of Taxation on Printing and Distributing the Interim Measures on Enterprise Income Tax Credit for the Investment of Technical-Transformed Domestic Equipment

Circular of the Ministry of Finance and the State Administration of Taxation on Printing and Distributing the Interim Measures on Enterprise Income Tax Credit for the Investment of Technical-Transformed Domestic Equipment

Cai Shui Zi [1999] No. 290

December 8, 1999

The financial departments (bureaus), the Offices of the State Administration of Taxation and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the State plan,

For the purposes of implementing the essence of the relevant decisions of the CPC Central Committee and the State Council, encouraging enterprises to increase investment, supporting enterprises' technical transformation and promoting product structure adjustment and steady economic development, the Ministry of Finance and the State Administration of Taxation have jointly formulated the Tentative Measures on Enterprise Income Tax Credit for Investment of Technical-Transformed Domestic Equipment, which are hereby printed and distributed to you for earnest implementation. Please implement accordingly. In case any problem occurs during the implementation, please timely report to the Ministry of Finance and the State Administration of Taxation.

Appendix: Tentative Measures on Enterprise Income Tax Credit for Investment of Technical-Transformed Domestic Equipment

Article 1 These Measures are hereby formulated for the purposes of encouraging enterprises to increase investment, supporting enterprises' technical transformation and promoting product structure adjustment and steady economic development.

Article 2 With respect to enterprises which invest in technical transformation projects that accord with national industrial policies within the territory of our country, 40% of the investment in the domestically manufactured equipment required in such projects may be credited against the increased part of enterprise income tax in the current year for the purchase of equipment for enterprises' technical transformation over that in the year before.

Article 3 Domestically manufactured equipment allowed for tax credit shall refer to equipment for production and operation (including test and inspection required in production) that is manufactured by domestic enterprises, excluding equipment directly imported from foreign countries and equipment manufactured through "three processing industries and one compensation" (processing raw materials on client's demands, assembling parts for the client, processing according to client's samples and compensation trade in foreign trade business).

Article 4 Investment as mentioned in these Measures shall refer to all funds other than financial appropriation, that is, bank loans and funds independently raised by enterprises, etc.
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