Core Viewpoint - The article discusses the tax incentives and policies implemented by the Chinese government to support the development of the manufacturing industry, particularly focusing on R&D expense deductions and other tax relief measures for small-scale taxpayers and micro-enterprises [2][3][18]. Tax Incentives for R&D - Enterprises engaged in R&D activities can deduct 100% of their actual R&D expenses from taxable income starting from January 1, 2023, if these expenses do not form intangible assets [3] - For R&D expenses that result in intangible assets, companies can amortize these costs at 200% for tax purposes [3] - The policy is designed to be a long-term institutional arrangement [4] Eligibility and Conditions - Eligible enterprises must have sound accounting practices and accurately account for R&D expenses, excluding certain industries such as tobacco, accommodation, and real estate [2] - R&D activities must be systematic and aimed at acquiring new scientific knowledge or significantly improving technology, products, or processes [6] - Companies must maintain separate accounts for R&D and operational expenses to qualify for the deductions [6] External R&D Collaborations - Expenses incurred from outsourcing R&D activities can be included as 80% of the actual costs for tax deductions, with specific rules for overseas collaborations [7] - Joint R&D projects among companies allow each party to calculate deductions based on their actual expenses [8] Application and Documentation - Companies must submit their tax prepayment declarations in July and October, along with annual tax reconciliation [9] - Relevant documentation must be retained for verification purposes [10] - Applications can be processed through online and offline tax service platforms [11] Additional Tax Relief for Small Enterprises - Small-scale taxpayers and micro-enterprises are eligible for various tax reductions, including exemptions from certain taxes and reduced rates for others, effective from January 1, 2023, to December 31, 2027 [18][19] - These entities can benefit from a 50% reduction in several local taxes, including urban maintenance and construction tax, resource tax, and property tax [19][20]