Ministry of Finance and State Administration of Taxation, Circular on the Policy of Pre-tax Deduction of Advertising Expenses and Business Publicity Expenses of Certain Industries

Issued: July 31 2009

Effective: January 1 2008 to December 31 2010

Main contents: Cosmetics, pharmaceutical and (non-alcoholic) beverage production enterprises may deduct the portion of advertising expenses and business publicity expenses not exceeding 30% of their sales (business) revenue of the year in question. Any portion in excess thereof may be carried forward and deducted in subsequent tax years (Article 1). For beverage production enterprises operating in the form of franchising, the franchisee may deduct the portion of advertising expenses and business publicity expenses incurred by it not exceeding 30% of its sales (business) revenue of the year in question, or part or all of such expenses may be incorporated by the franchisor or management for pre-tax deduction as sales expenses (Article 2). Tobacco advertising expenses and business publicity expenses of tobacco enterprises may not be deducted from the taxable income (Article 3).