A recent circular from PRC Ministry of Finance and the PRC State Administration of Taxation introduce, retroactively from January 1st, 2015, the possibility (at the taxpayer’s own discretion), for companies operating in the field of light industry, textile, machinery or automobile to reduce the number of years required for the amortization of their fixes assets purchased after January 1st, 2015.

The circular further clarify that the cost for the purchase of instruments or equipment not above 1 Million Chinese Yuan purchased by such companies after January 1st, 2015 may, if above companies are also considered as “low – profit”, be reported in full and as one off as a cost and be calculated for the determination of the taxable income, without the need to calculate further amortizations; if above goods are above 1 million Chinese Yuan, such companies may adopt, at their own discretion, the “fast amortization” option.

Finally, the circular also clarify that the minimum years required for the “fast amortizations” shall not be lower than 60% of the years required for the regular amortization (i.e., based on current regulations, from three to 20 years, according to the fixed assed to be depreciated).

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