After being announced during one State Council Standing Committee meeting in July 2018, on 20 September 2018, the Ministry of Finance released the Notice on Increasing the Proportion of Pre-tax Deduction for R&D expenditure (Cai Shui  No. 99), with the aim to further stimulating enterprises to conduct R&D activities.
The Notice stipulates that, the actual R&D expenditure incurred by enterprises for R&D activities which have not been included in the current loss and profit as intangible assets, in addition to the deductions applicable as already prescribed to the extent of the amount actually incurred, shall be deducted from the enterprise’s taxable income for an additional 75% of the amount of the R&D expenses actually incurred between 1 January 2018 and 31 December 2020. In case intangible assets were generated, 175% of the costs of the intangible assets shall be amortised before tax.
This preferential pre-tax deduction policy was previously applicable only to SMEs which had been recognised as ‘technology enterprises’. See MOF’s Notice on Increasing the Proportion of Pre-tax Deductions for the R&D Expenditures of S&T-based SMEs (Cai Shui  No. 34), link.