In May 2018, Ministry of Finance and State Administration of Taxation jointly issued Notice of the Relevant Enterprise Income Tax Policies for the Deduction of Equipment and Instruments (hereinafter referred to as “Policy of Pre-tax Deduction at One Time”). The Notice ascertained if the unit price of the equipment or instruments newly purchased during the period from January 1, 2018 to December 31, 2020 by an enterprise is not more than 5 million yuan, such equipment or instruments are allowed to be included in the current costs and expenses at one time and deducted in the calculation of taxable income, instead of being depreciated annually.

Q：	What is meant by equipment and instruments in the Notice?
A：	The ‘equipment and instruments’ in the Notice  refer to fixed assets beyond premises and buildings (hereinafter referred to as “Fixed Assets”).
Q：	Except for equipment and instruments purchased, can enterprise deduct self-built fixed assets from taxable income at one time?
A：	In the Announcement of the State Administration of Taxation 2018 No. 46, it is clarified that the  “purchased” includes purchased in cash or self-built.
Q：	How to determine the unit value of a self-built fixed asset?
A：	For self-built fixed assets,  the unit price shall be determined by the expenses incurred before the final settlement upon completion of the assets in question. the unit price shall be determined by the expenses incurred before the final settlement upon completion of the assets.
Q：	Assuming a company bought a fixed asset with value not exceeding 5 million, when can it deduct the whole amount from taxable income at one time?
A：	The fixed asset can be deducted from taxable income at full cost at one time in the following month of the month of coming into use.
Q：	If a company chooses not to enjoy the Policy of Pre-tax Deduction at One Time for a certain fixed asset purchased, can the company choose to enjoy the policy for the same asset after that?
A：	Enterprises may choose to enjoy the Policy of Pre-tax Deduction at One Time based on their own need of manufacturing, operating and accounting. Once choosing not to enjoy the police, no amendment is allowed in subsequent years.
Q：	If a company includes a fixed asset in the current costs and expenses at one time and deducts it from taxable income, is it necessary to account it for as a fixed asset in the accounting book?
A：	Where an enterprise chooses to enjoy the Policy of Pre-tax Deduction at One Time, the tax treatment and accounting treatment of the asset can be different. The aforesaid “be included in the current costs and expenses at one time” in the Notice refers to the tax treatment, which means to deduct the costs from taxable income at one time before calculating the corporate income tax (CIT); in the respect of accounting treatment, it should be recorded in the fixed asset and depreciate accordingly.
Q：	What problem will be caused if  the  company includes the fixed asset in the expenses at one time and records the asset and depreciates it in the accounting books as usual?
A：	If a fixed asset is depreciated faster in taxation than in accounting books,  then the accounting depreciation is less than the tax depreciation, thus the temporary difference between its tax base and its net book value will produce the differed tax liability.
Q：	If the company choose to enjoy this policy, does it need to submit any administrative documents to the tax authority?
A：	The company does not need to submit any documents to tax authority, but the following materials should be reserved for future inspection: The materials in relation to the time point of purchase (the invoice if the fixed asset is purchased, the statement of goods arrival if the fixed asset is purchased by instalment or credit, the completion and clearance situation statement if the fixed asset is self-built); The accounting voucher of the fixed asset; The ledger of calculation of the difference between tax treatment and accounting treatment for fixed assets.