What are the R&D expenses of enterprises?

(1) According to the Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on Printing and Distributing the Administrative Measures for Pre-tax Deduction of Research and Development Expenses of Enterprises (Trial) (Guo Shui Fa [2008]116), the following expenses incurred by enterprises engaged in qualified research and development activities are allowed to be deducted in accordance with regulations when calculating taxable income:

1. New product design fees, new process regulations formulation fees, technical books and materials fees and materials translation fees directly related to R&D activities;

2. The cost of materials, fuel and power directly consumed in R&D activities;

3. Wages, salaries, bonuses, allowances and subsidies of on-the-job personnel directly engaged in R&D activities;

4. Depreciation fees or rental fees for instruments and equipment specially used for R&D activities;

5. Amortization expenses of intangible assets such as software, patents and non-patented technologies specially used for R&D activities;

6. Development and manufacturing expenses of molds and process equipment specially used for intermediate test and product trial production;

7. On-site test fee for exploration and development technology;

8. Expenses for demonstration, review and acceptance of research and development achievements.

(II) According to the Notice of State Taxation Administration of The People's Republic of China of the Ministry of Finance on Relevant Policy Issues Concerning Pre-tax Addition and Deduction of R&D Expenses (Cai Shui [20 13] No.70), the following expenses incurred by enterprises engaged in qualified R&D activities since 2013 are also allowed to be added and deducted before tax:

1. The basic old-age insurance premium, basic medical insurance premium, unemployment insurance premium, work-related injury insurance premium, maternity insurance premium and housing accumulation fund paid by enterprises for employees directly engaged in R&D activities in accordance with the scope and standards stipulated by the relevant competent authorities in the State Council or the provincial people's government.

2. Operation, maintenance, adjustment, testing and maintenance expenses of special instruments and equipment for R&D activities.

3. Purchase expenses for samples, prototypes and general detection means that do not constitute fixed assets.

4. Clinical trial fees for new drug development.

5.R&D achievement appraisal fee.

(3) The following research and development expenses incurred by an enterprise shall not be deducted before tax:

1. Depreciation and lease fees for fixed assets (including houses and buildings) other than instruments and equipment specially used for R&D activities;

2. Development and manufacturing expenses of molds and process equipment not specially used for intermediate test and product trial production, and operation, maintenance, adjustment, inspection and repair expenses of instruments and equipment not specially used for R&D activities;

3. Intellectual property application fee, registration fee and agency fee;

4. Amortization expenses of intangible assets such as software, patents and non-patented technologies that are not specially used for R&D activities;

5. Conference expenses, travel expenses, office expenses, foreign affairs expenses, R&D personnel training fees, expert consultation fees, high-tech R&D insurance fees, etc. ;

6. Expenses that shall not be deducted before enterprise income tax as stipulated by laws, administrative regulations and State Taxation Administration of The People's Republic of China;

7. The enterprise has not set up a special R&D institution or the enterprise R&D institution undertakes production and operation tasks and unclear expenses at the same time;

8. R&D expenses incurred by enterprises engaged in R&D activities;

9 enterprises to obtain special financial allocations for research and development expenditures in research and development activities;

10. Other non-conforming research and development expenses.