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Li Jing, reporter of Yangtze Business Daily Pentium News

Large-scale equipment upgrades ushers in the latest tax incentives.

On July 17, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on the Corporate Income Tax Policy for Digital and Intelligent Transformation of Special Equipment for Energy Saving, Water Saving, Environmental Protection, and Work Safety" (hereinafter referred to as the "Announcement"), which clearly stipulates that the investment in digital and intelligent transformation of special equipment incurred by enterprises between January 1, 2024 and December 31, 2027, which does not exceed 50% of the original tax base when the special equipment was purchased, can be deducted from the enterprise's tax payable in the current year at a rate of 10%. If the enterprise's tax payable in the current year is insufficient to be deducted, it can be carried forward to subsequent years for a maximum of no more than five years.

A reporter from the Yangtze Business Daily Pentium News learned that the "Announcement" is the implementation of the "Notice of the State Council on Issuing the Action Plan to Promote Large-Scale Equipment Updates and Consumer Goods Trade-ins" (hereinafter referred to as the "Notice") in March this year, which requires "increasing tax incentives and support for special equipment for energy conservation, water conservation, environmental protection, and safe production." It is also an expansion of the relevant tax incentive policies implemented since 2008.

The digitalization and intelligent transformation of special equipment referred to in the "Announcement" means that enterprises use information technology and digital technology to make technical improvements and optimizations on special equipment, thereby improving the digitalization and intelligence level of the equipment.

Compared with the previously implemented corporate income tax preferential policies for special equipment such as environmental protection, energy conservation and water conservation, and safe production, the "Announcement" has expanded the scope of preferential policies to include "investment in digital and intelligent transformation of special equipment."

The "Announcement" includes six types of digital and intelligent transformation of special equipment into the scope of tax preferential support, including data collection, data transmission and storage, data analysis, intelligent control, digital security and protection, as well as other digital and intelligent transformation situations stipulated by the financial and tax authorities of the State Council in conjunction with the science and technology, industry and information technology departments.

According to the regulations, enterprises that enjoy the tax preferential policies stipulated in the "Announcement" should actually use the modified special equipment themselves; they should formulate a digital and intelligent transformation plan for special equipment in advance, or obtain a technology development contract or technical service contract registered by a technology contract recognition and registration agency, and retain relevant materials for future reference; enterprises should separately account for the investment in digital and intelligent transformation of special equipment, and accurately and reasonably collect various expenditures.

Since the beginning of this year, promoting large-scale equipment upgrades and trade-in of old consumer goods has been actively promoted as an important measure to accelerate the construction of a new development pattern and promote high-quality development.

The "Notice" issued in March proposed to increase tax incentives for energy-saving, water-saving, environmental protection, and safety production equipment, and include digital and intelligent transformation in the scope of preferential treatment. Recently, the Ministry of Finance has also implemented a fiscal interest subsidy policy for equipment renewal loans, clarifying that if the loans issued by banks to business entities meet the conditions for reimbursement of refinancing, the central government will subsidize the principal of bank loans of business entities by 1 percentage point, and the subsidy period shall not exceed 2 years.

It is worth mentioning that at the roundtable meeting for foreign-invested enterprises held on the same day to interpret the large-scale equipment renewal and consumer goods trade-in policies, representatives from the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the People's Bank of China and other departments responded to the problems raised by the enterprises and the suggestions put forward.

The relevant person in charge of the Ministry of Commerce pointed out that promoting a new round of large-scale equipment renewal and consumer goods replacement will effectively expand domestic demand, promote investment, upgrade consumption, and provide huge market space for all types of enterprises, including foreign-funded enterprises. China will unswervingly promote high-level opening up, optimize the business environment, and support domestic and foreign-funded enterprises to participate in large-scale equipment renewal and consumer goods replacement, as well as related government procurement and project investment. It is hoped that foreign-funded enterprises will seize the opportunity, deepen their presence in the Chinese market, and increase their investment in China.