Recently, an announcement on matters related to the pre-tax deduction of advertising expenses and business promotion expenses was issued. This announcement continues the current deduction policy for advertising expenses and business promotion expenses, and the implementation time has been extended to December 31, 2025. Please read down for specific regulations:

Announcement on matters related to pre-tax deduction of advertising expenses and business promotion expenses

Source: Announcement No. 43 (2020) of the Ministry of Finance and the State Administration of Taxation.
Time: November 27, 2020.

In accordance with the “Enterprise Income Tax Law of the People’s Republic of China” and its implementation regulations, the announcement regarding the pre-tax deduction of advertising expenses and business promotion expenses is hereby announced as follows:

1. For cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcohol manufacturing) enterprises’ advertising and business promotion expenses, the part that does not exceed 30% of the current year’s sales (operating) income is allowed to be deducted; the excess part is allowed to be deducted Carry forward for deductions in future tax years.
2. For affiliated enterprises that have signed an agreement on the sharing of advertising expenses and business promotion expenses (hereinafter referred to as the sharing agreement), the advertising expenses and business promotion expenses incurred by one of the parties do not exceed the pre-tax deduction limit for sales (business) income of the year. The enterprise can also deduct part or all of it to the other party for deduction according to the apportionment agreement. When calculating the pre-tax deduction limit for corporate income tax on advertising and business promotion expenses of the company, the other party may exclude the advertising and business promotion expenses that have been aggregated to the company in accordance with the above methods.
3. The tobacco advertising expenses and business promotion expenses of tobacco companies shall not be deducted in calculating the taxable income.
4. This notice will be implemented from January 1, 2021 to December 31, 2025. The Circular of the Ministry of Finance and the State Administration of Taxation on the Pre-tax Deduction Policy for Advertising Expenses and Business Promotion Expenses (Caishui [2017] No. 41) shall be repealed from January 1, 2021.
   

Remarks: For extensive collection of related information for reference.