At the end of this month, the 2023 annual corporate income tax final settlement period will come to an end. According to the data of the 12366 tax payment service hotline of the Anhui Provincial Taxation Bureau of the State Administration of Taxation (hereinafter referred to as Anhui 12366), during the final settlement period, many enterprises inquired about the enjoyment of the preferential treatment of additional deduction of R&D expenses. Starting from January 1, 2023, enterprises can independently choose to enjoy the additional deduction of R&D expenses in July, October and annual final settlement based on the actual situation of their own production and operation. Judging from the consultation received by Anhui 12366, many enterprises are very concerned about the difference between the prepayment declaration and the annual final settlement declaration. One of the more concentrated questions is: what should enterprises pay attention to during the final settlement after enjoying the preferential treatment of R&D expenses in July or October in advance?
Typical cases
Company A is an information transmission, software and information technology service enterprise, developing new products in 2023, and incurring a total of 1 million yuan of qualified R&D expenses, enjoying 100% additional deduction of R&D expenses. As of June 30, 2023, Company A has incurred R&D expenses of 600,000 yuan, of which 400,000 yuan can be accurately collected and accounted for, and the remaining 200,000 yuan cannot be accurately collected and accounted for; In September 2023, Company A incurred R&D expenses of 300,000 yuan, which could be accurately collected and accounted for, and this month, it also accurately collected 200,000 yuan of R&D expenses that could not be accurately collected and accounted for in the first half of the year; In November 2023, Company A incurred R&D expenses of 100,000 yuan, which can be accurately collected and calculated.
Prepayment declaration
Company A chooses to prepay in July and October to apply for the additional deduction policy of R&D expenses.
When prepaying enterprise income tax in July and October 2023, Company A has filled in the detailed lines under line 7 of the "Less: tax-exempt income, reduced income, and additional deduction" of the R&D expenses of 400,000 yuan and 900,000 yuan (40+30+20) that can be accurately collected and accounted for in line 7 of the "Monthly (Quarterly) Prepayment Tax Return of the People's Republic of China (Class A)" (A200000), and fill in the name of the relevant preferential items "Enterprise development of new technologies, new products, additional deduction of R&D expenses incurred in the new process (100% additional deduction)" and the cumulative preferential amount of this year "400000" and "900000". According to the relevant situation of the second quarter and the third quarter of the enterprise, fill in the "Detailed Table of Additional Deduction of R&D Expenses" (A107012) by item, and keep the table for future reference.
Final Settlement Declaration
At the time of the annual final settlement, the financial personnel of Company A should fill in the "Basic Information Form of Annual Tax Declaration of Enterprise Income Tax" (A000000), "Detailed Table of Period Expenses" (A104000), "Detailed Table of Additional Deduction of R&D Expenses" (A107012), "Detailed Table of Tax Exemption, Deduction of Income and Additional Deduction Preferential Statement" (A107010), and "Annual Tax Return of Enterprise Income Tax of the People's Republic of China (Class A)" (A100000).
The first step is to fill in the "Basic Information Form for Annual Tax Declaration of Enterprise Income Tax" (A000000). In addition to filling in the "basic business situation" column according to the actual situation of the enterprise, the "224 R&D expenditure auxiliary account style" should be checked according to the actual situation. When setting up auxiliary accounts according to R&D projects, enterprises can choose to use the 2015 version of the R&D expenditure auxiliary account style, or the 2021 version of the R&D expenditure auxiliary account style, or they can design their own R&D expenditure auxiliary account style with reference to the above style. If an enterprise designs its own R&D expenditure auxiliary account style, it should include the data items listed in the 2021 version of the R&D expenditure auxiliary account style, and the logical relationship is consistent, and the R&D expenses that are allowed to be deducted can be accurately collected.
The second step is to fill in the "Period Expense Schedule" (A104000). When Company A fills in the "Research Expenses" in line 19 of the form, it should fill in the amount of the specific items calculated according to the expense account. Suppose that Company A incurs an expenditure of 1 million yuan, including 200,000 yuan of personnel and labor costs, 500,000 yuan of direct input costs, 100,000 yuan of depreciation expenses, and 200,000 yuan of new product design expenses, and does not generate any income in R&D activities. Then, Company A should fill in the "Management Expenses" column in the third column of "Research Expenses" in line 19 of the form with an administrative expense of RMB 1 million (20+50+10+20).
The third step is to fill in the "R&D Expenses Additional Deduction Preferential Schedule" (A107012). Company A shall, according to the R&D expenditure auxiliary account style, select and fill in different lines according to the details of the R&D expenses of 1 million yuan that can be accurately collected throughout the year. The author reminds that when taxpayers use the 2021 version of the R&D expenditure auxiliary account style or use the self-designed R&D expenditure auxiliary account style, the detailed lines under line 3 "(1) personnel labor costs", line 7 "(2) direct input costs", line 16 "(3) depreciation expenses", line 19 "(4) amortization of intangible assets", line 23 "(5) new product design costs, etc.", line 28 "(6) other related expenses" and other lines do not need to be filled, and these lines do not need to implement the prescribed calculation relationship in the table.
The fourth step is to fill in the "Tax-exempt, Write-down Income and Additional Deduction Preferential Schedule" (A107010). After the financial personnel of Company A fill in the "Detailed Table of Additional Deduction of R&D Expenses" (A107012), the data will be automatically substituted into the "Detailed Table of Tax Exemption, Deduction Income and Additional Deduction Preferential Statement" (A107010), at this time, line 25 "3. Additional deduction" and line 26 "(1) Additional deduction of R&D expenses incurred in the development of new technologies, new products and new processes (fill in A107012)" with the amount of "1000000".
The fifth step is to fill in the "Annual Tax Return of Enterprise Income Tax of the People's Republic of China (Class A)" (A100000). "1,000,000" in the "Tax-exempt, Reduced-income and Additional Deduction Preferential Schedule" (A107010) will be automatically brought into the 17th column of the "Annual Tax Return of the People's Republic of China for Enterprise Income Tax (Class A)" (A100000), that is, the amount of "Less: Tax-exempt, Reduced-income and Additional Deduction (fill in A107010)" is filled in "1000000". At this point, Company A's annual final settlement and payment of R&D expenses have been completed.
Source: China Tax News; 17.05.2024; Edition: 06; Author: Hu Jinmei, Liu Luyang; Author's Affiliation: 12366 Tax Payment Service Center of Anhui Provincial Taxation Bureau, State Administration of Taxation. The content of this article is for general information purposes only and is not intended as formal auditor, accounting, tax or other advice, and we cannot guarantee that such information will remain accurate in the future. No person should act on the basis of the information contained herein without having due regard to the relevant circumstances and obtaining appropriate professional advice. The articles reproduced in this issue are for academic exchange purposes only. The original copyright of the article or material belongs to the original author or original copyright owner, and we respect copyright protection. If you have any questions, please contact us, thank you!