According to the Announcement Jointly Issued by the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Raising Pre-tax Deductions for Supporting Scientific and Technological Innovation (Announcement from the Ministry of Finance, the State Taxation Administration and the Ministry of Science and Technology, [2022] No. 28), for enterprises that currently eligible for a 75 percent pre-tax deduction of R&D expenses, the pre-tax deduction rate will be increased to 100% during the period from October 1, 2022 to December 31, 2022.

During the final settlements of enterprise income tax of 2022, enterprises benefiting from the additional deduction preferential policy for R&D expenses may calculate their fourth quarter R&D expenses in two ways at their own discretion, either based on their actual expenses in the quarter or multiplying the actual R&D expenses incurred throughout the year by the proportion of the number of operating months after October 1, 2022, to the actual number of operating months in 2022.