Announcement of State Administration of Taxation concerning Enterprise Income Tax Policies on Accelerated Depreciation of Fixed Assets (SAT Announcement [2014] No.64)      (国家税务总局关于固定资产加速折旧税收政策有关问题的公告)

Following the issuance of the tax circular Caishui [2014] No. 75 (“Circular 75”) concerning tax policies on accelerated depreciati on of fixed assets (see our Legal Flash of October 2014), on November 14, 2014, SAT issued Announcement [2014] No. 64 (“Announcement 64”) to facilitate the implementation of these tax policies.

The main highlights of Announcement 64 are as follows:

  • Circular 75 provides that enterprises conducting businesses in the six industries listed in the circular can shorten the depreciation period or adopt accelerated depreciation methods for the fixed assets purchased after January 1, 2014.

Announcement 64 points out that the scope of these six industries shall be in accordance with the Classification and Code of National Economic Industries (GB/14754-2011), which is compiled by the National Bureau of Statistics.

An enterprise is deemed to conduct businesses in one of the six industries if the income deriving from that activity accounts for over 50% of its total items of income as defined by Article 6 of the EIT Law.

  • Announcement 64 clarifies that specialized instruments and equipment for development purposes mentioned in Circular 75 shall be those under the scope of the Administrative Measures (Trial) on Enterprises’ R&D Expenses Deduction before Tax (Guoshuifa [2008] No.116) or the Administrative Guidelines for Determination of High and New Technology Enterprise (Guokefahuo [2008] No. 362).
  • Announcement 64 clarifies that the accelerated depreciation methods (i.e. double-declining-balance method and sum-of-year-digits method) mentioned in Circular 75 shall be interpreted in line with the definition provided in the Notice concerning EIT Treatment for Accelerated Depreciation of Fixed Assets (Guoshuifa [2009] No. 81).

Announcement 64 also sheds light for the coordinated interpretation and application of the tax policies provided in Circular 75 and other tax circulars in relation to accelerated depreciation items, and on the administrative and follow- up monitoring measures for the these policies.

Date of issue: November 14, 2014. Date of effectiveness: January 1, 2014.