From January 1, 2023, the following China tax changes applies to companies:

High-Technology Companies

For those who purchased new equipment and appliances between October 1, 2022, and December 31, 2022, a lump sum deduction is allowed in the calculation of taxable income for the current year.

100% super-deduction before tax is allowed

Research and Development (R&D) Expenses

For companies that currently apply 75% of the pre-tax super-deduction rate for R&D expenses, the pre-tax super-deduction rate will increase to 100% for the period between October 1, 2022, and December 31, 2022.

Micro, Small and Medium-sized Companies

For those who purchased new equipment and appliances between January 1, 2022, and December 31, 2022, (with a unit value exceeding 5 million yuan), may voluntarily choose to deduct them before enterprise income tax, as according to certain unit value proportions.

Small and Micro-Profit Companies

Annual taxable income of small and micro-profit enterprises that does not exceed 1 million yuan, shall be reduced to 12.5% included in the taxable income. Enterprise income tax shall be paid at 20%. Therefore, the actual tax rate for annual taxable income that does not exceed 1 million is only 2.5%.

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