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Income Tax on Foreign Investment Enterprises (FElT) 3
5. TAX TREATMENT OF ASSETS
5.1 The cost of construction of machinery, equipment, buildings and other fixed assets may generally not be deducted when incurred. Depreciation may be claimed on fixed assets having a useful life of more than one year. Items with a unit value of less than RMB 2, 000 may be fully written off in the year of operation. For items over RMB 2,000, they can be depreciated over the following shortest possible years with 10% scrap value:
Building and construction (20 years); train, ship, machinery, and other production equipment (10 years), electronic equipment and transportation tool other than train and ship, other production tool and furniture (5 years). The taxpayer can apply to the tax authority for a shorter period.
Depreciation is generally calculated using the straight-line method over the useful life of the assets. Other methods can be applied upon approval of the local tax authority.
5.2 Intangible assets such as patents, trademark rights, copyrights, and land use rights are amortized by the straight-line method over the period as set in the contract. If there is no stipulated period, it can be amortized over at least 10 years.
5.3 Expenses incurred by an enterprise starting from the approval date of establishment and prior to the date of operation must be amortized from the second month of operation . The amortization period must not be less than 5 years.
5.4 Other treatments are by and large similar to those of domestic enterprises
5.1 The cost of construction of machinery, equipment, buildings and other fixed assets may generally not be deducted when incurred. Depreciation may be claimed on fixed assets having a useful life of more than one year. Items with a unit value of less than RMB 2, 000 may be fully written off in the year of operation. For items over RMB 2,000, they can be depreciated over the following shortest possible years with 10% scrap value:
Building and construction (20 years); train, ship, machinery, and other production equipment (10 years), electronic equipment and transportation tool other than train and ship, other production tool and furniture (5 years). The taxpayer can apply to the tax authority for a shorter period.
Depreciation is generally calculated using the straight-line method over the useful life of the assets. Other methods can be applied upon approval of the local tax authority.
5.2 Intangible assets such as patents, trademark rights, copyrights, and land use rights are amortized by the straight-line method over the period as set in the contract. If there is no stipulated period, it can be amortized over at least 10 years.
5.3 Expenses incurred by an enterprise starting from the approval date of establishment and prior to the date of operation must be amortized from the second month of operation . The amortization period must not be less than 5 years.
5.4 Other treatments are by and large similar to those of domestic enterprises
