Intangible assets refer to identifiable non-monetary assets owned or controlled by an enterprise that have no physical form, usually including patent rights, non-patented technologies, trademark rights, copyrights, concessions, land use rights, etc. The following is a brief introduction to several tax-related issues of mixed intangible assets.

1. Recognition of purchased intangible assets
   
   According to Chinese accounting standards, an enterprise should      analyse and judge the service life of intangible assets when acquiring them. If the useful life of an intangible asset is limited, it should be estimated for the number of similar units of measurement such as the number of years of its useful life or the output that constitutes the useful life, and if the period of economic benefits that the intangible asset will bring to the enterprise cannot be predicted, it should be regarded as an intangible asset with an uncertain useful life.
   
   If there is software nested or pre-installed in the fixed assets purchased by the enterprise, such as computers, mobile phones and other electronic products, if the value of the software cannot be valued separately, it can be recorded as a fixed asset without necessary to separately identify the intangible assets.  
   
   Goodwill is not an intangible asset. The expenditure on the goodwill purchased by an enterprise shall be allowed for deduction when the enterprise is transferred or liquidated.
   
   
2. Subsequent expenditures on intangible assets
   
   Subsequent expenditure on intangible assets refers to the expenditure incurred after the intangible assets are recorded in the account to ensure that they can bring predetermined economic benefits to the enterprise. Subsequent expenditures on intangible assets should be recognized as expenses in the period in which they are incurred.
   
   According to Chinese accounting standards, an enterprise's expenditure on intangible assets should be included in the profit or loss of the current period when it occurs, except for the following circumstances:
   
   (1) The part that meets the recognition conditions stipulated by PRC accounting standards and constitutes the cost of intangible assets.
   
   (2) The part of the business combination acquired under non-uniform control that cannot be separately recognized as intangible assets and constitute goodwill recognized on the date of purchase.
   
   The general upgrade of software purchased by enterprises is a follow-up expenditure of intangible assets, which should be included in the profit or loss of the current period and must not be capitalized.
   
   
3. Amortization and reversal of intangible assets
   
   The method of amortization of an intangible asset chosen by an enterprise should reflect the expected realization of the economic benefits associated with that intangible asset. If the expected implementation cannot be reliably determined, the straight-line method of amortization is used.
   
   For intangible assets with a limited service life, the amount of amortization shall be systematically and reasonably amortized during the service life, and the amortization period shall not be less than 10 years; as an intangible asset invested or transferred, if the service life is stipulated in the relevant laws or contracts, it may be amortized in stages in accordance with the provisions or the agreed service life; and the intangible assets with an uncertain service life shall not be amortized.
   
   For software purchased by an enterprise, where it meets the conditions for the recognition of fixed assets or intangible assets, it can be accounted for according to the fixed assets or intangible assets, and its depreciation or amortization period can be appropriately shortened, and the shortest may be 2 years (inclusive).
   
   According to Chinese accounting standards, the amortization of intangible assets cannot be written back unless there is a material accounting error in accounting. If a material accounting error occurs that requires the amortization of intangible assets accrued in the previous year, it must be made through the "prior year profit and loss adjustment", which will not affect the more current accounting profit.
   
   
4. Tax treatment of transfer of intangible assets
   
   

   (1)

   Value-added Tax The transfer of intangible assets is the sale of intangible assets and is subject to VAT.  If the relevant provisions of the conditions for technology transfer are met, they can be exempted from VAT.

   (2)

   Enterprise Income Tax ① An enterprise transferring or selling intangible assets requires the recognition of taxable income at its fair value. ② The cost of intangible assets created by the enterprise has been deducted before tax in the previous period, so the amount that can be deducted before tax at the time of transfer is zero. ③  If an enterprise invests in intangible assets and satisfies the relevant provisions of "income from the transfer of non-monetary assets recognized by foreign investment in non-monetary assets", the transfer income may be evenly included in the taxable income of the corresponding year in installments within a period of not more than 5 years, and the enterprise income tax shall be calculated and paid in accordance with the regulations. ④ If the enterprise transfers intangible assets without compensation and satisfies the conditions for special tax treatment, the income may not be recognized. ⑤ If an enterprise transfers a patent to the outside world, if it meets the relevant conditions for technology transfer stipulated in the Enterprise Income Tax Law, the part of the technology transfer income that does not exceed 5 million yuan in a tax year is exempted from enterprise income tax; The part exceeding 5 million yuan will be halved to levy corporate income tax.

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