Core Policy "Four Focus Points" - Specific enterprise deduction ratio: For cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcoholic beverages), advertising and promotional expenses not exceeding 30% of the current year's sales revenue are allowed for tax deduction; excess amounts can be carried forward to future tax years [2][3] - Related enterprise allocation rules: For related enterprises that sign an allocation agreement for advertising and promotional expenses, the expenses incurred by one party within the allowable deduction limit can be deducted by that enterprise or allocated to the other party according to the agreement [2] - Tobacco enterprises are not allowed to deduct: Tobacco advertising and promotional expenses are not deductible when calculating taxable income [3] - Policy execution period: The policy will be effective from January 1, 2026, to December 31, 2027 [3] Deduction Calculation Requirements - Deduction base requirement: When calculating the deduction limit for advertising and promotional expenses, the sales revenue must include the deemed sales revenue as specified in Article 25 of the Implementation Regulations [4] - Documentation retention requirement: Records, accounting vouchers, reports, tax payment certificates, invoices, export certificates, and other relevant tax-related materials must be retained for 10 years [5] Case Study 1: 30% Deduction Ratio Enterprise - Calculation of deduction limit base: For a cosmetics manufacturing enterprise with main business income of 10 million, other business income of 7 million, and deemed sales revenue of 3 million, the total base for deduction calculation is 20 million [7] - Calculation of current year deduction limit: The limit is 20 million × 30% = 6 million [7] - Total deductible amount for the current year: Actual advertising and promotional expenses of 3 million are less than the limit of 6 million, allowing full deduction; previously carried forward amount of 500,000 can also be deducted, totaling 3.5 million [7] Case Study 2: Related Enterprise Advertising Expense Allocation Agreement - For enterprise A with sales revenue of 30 million and advertising expenses of 6 million, the allowable deduction limit is 30 million × 15% = 4.5 million; after allocating 40% of expenses to enterprise B, the total deductible amount for enterprise A is 2.7 million [10][11] - For enterprise B with sales revenue of 20 million and advertising expenses of 4 million, the allowable deduction limit is 20 million × 15% = 3 million; total deductible amount for enterprise B is 4.8 million, resulting in a tax adjustment of -80,000 [10][12]

Core Viewpoint - The recent announcement by the Ministry of Finance and the State Taxation Administration allows cosmetic, pharmaceutical, and beverage manufacturing companies to deduct advertising and promotional expenses up to 30% of their annual sales revenue, effective from January 1, 2026, to December 31, 2027, providing a significant financial relief for these industries [3][4]. Group 1: Policy Details - The new policy extends the existing tax deduction for advertising and promotional expenses for the cosmetic, pharmaceutical, and beverage manufacturing sectors, which previously had a deduction limit of 30% compared to the 15% limit for other industries [4]. - This policy aims to alleviate cash flow pressures for these industries, encouraging them to invest more in marketing and brand building [4]. - The announcement reiterates that tobacco advertising expenses are not deductible, aligning with health regulations [4]. Group 2: Historical Context - The original policy allowing a 30% deduction for these industries was first introduced in 2009 and has been extended multiple times, with the last extension set to expire at the end of 2025 [4]. - The current announcement extends this favorable tax treatment until the end of 2027, providing a "reassurance" for companies in these sectors [4]. Group 3: Related Provisions - The announcement clarifies that related companies can share advertising and promotional expense deductions through a cost-sharing agreement, allowing for flexibility in tax deductions [5].

Core Viewpoint - The announcement from the Ministry of Finance and the State Taxation Administration allows companies in the cosmetics, pharmaceuticals, and beverage manufacturing sectors to deduct advertising and promotional expenses up to 30% of their annual sales revenue, effective from January 1, 2026, to December 31, 2027, which is an extension of an existing policy [2][3]. Group 1 - The new policy permits advertising and promotional expenses not exceeding 30% of annual sales revenue to be deductible, with any excess allowed to be carried forward to future tax years [2][3]. - This policy is particularly beneficial for the cosmetics, pharmaceuticals, and beverage industries, which typically incur higher advertising costs relative to their sales revenue [3]. - The previous deduction limit for other industries was 15%, highlighting the favorable treatment for the specified sectors [3]. Group 2 - The announcement reiterates that tobacco advertising expenses are not deductible, in line with health regulations prohibiting tobacco advertising [3]. - It also clarifies that related companies can share advertising and promotional expense deductions under specific agreements, allowing for flexibility in tax calculations [4].

Core Viewpoint - The Ministry of Finance and the State Taxation Administration have announced that advertising and business promotion expenses for cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcoholic beverages) can be deducted up to 30% of the annual sales revenue, with any excess allowed to be carried forward to future tax years [1] Group 1 - The new tax policy applies to specific industries: cosmetics, pharmaceuticals, and non-alcoholic beverages [1] - Companies in these sectors can benefit from a tax deduction on advertising and promotional expenses, enhancing their financial flexibility [1] - The policy aims to support growth in these industries by allowing significant deductions on marketing expenditures [1]