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	REPLY OF THE STATE ADMINISTRATION OF TAXATION ON STANDARDS FOR IMPLEMENTATION OF PREFERENTIAL INCOME TAXES ON NEWLY ESTABLISHED ENTERPRISES

	(No. 1239 [2003] of the State Administration of Taxation, November 18, 2003)


SUBJECT : CORPORATE TAXATION; PREFERENTIAL INCOME TAX; NEWLY ESTABLISHED ENTERPRISES
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 11/18/2003
IMPLEMENT DATE : 11/18/2003
LENGTH : 335 words
TEXT :

Regarding "Request for Instruction on the Starting Date for Deduction and Exemption of Income Taxes on Enterprises" (No. 240 [2003] of the Administration of State Taxation of Beijing Municipality) has been received, we hereby make the following reply after deliberation:

Since the implementation of the Circular of the State Administration of Taxation on Some Operation Issues concerning Enterprise Income Taxes (No.191 [1997] of the State Administration of Taxation), there have been different understandings concerning the date for the production and operation of newly established enterprises or entities in each region. For the convenience of specific implementation and unified understanding by each region, the standards for implementation of the date for opening business of newly established enterprises or entities shall be uniformly determined as the establishment date indicated in the business license of the taxpayers. Where the establishment date indicated in the business license of an enterprise is before June 30, the year of establishment shall be regarded as one taxpaying year, and the enterprise shall enjoy periodical tax deduction and exemption preferences. Where the establishment date is after June 30, the enterprise may file an application in writing to the tax authorities in charge for choosing to pay the enterprise income taxes on the income gained in the current year, and to put off to the next year the calculation of the term for implementation of periodical deduction or exemption on enterprise income taxes. In case the enterprise suffers losses in the year right after having chosen the method, the taxes having been paid in the previous year shall not be returned, and the year suffering losses shall be deemed as the time limit for implementation of tax deduction or exemption in the calculation. And the amount of losses shall be supplemented with the income gained in the later years prescribed.

In addition, since the enterprise income taxes are calculated and collected on a yearly basis, the tax authorities shall examine and approve the deduction and exemption of enterprise income taxes on a yearly basis.