One-Time Pre-Tax Deduction or Accelerated Depreciation and Amortization for Capital Expenditures in the Hainan Free Trade Port

(Based on Cai Shui [2020] No. 31, extended under Cai Shui [2025] No. 3)

Official Source:

Core Policy Summary

From January 1, 2020, to December 31, 2024, enterprises established in the Hainan Free Trade Port (FTP) may apply preferential tax treatment for newly purchased (including self-built or self-developed) fixed assets and intangible assets.

• For assets with a unit value not exceeding RMB 5 million (inclusive), enterprises are allowed to make a one-time deduction by including the asset’s cost directly in the current period’s expenses when calculating taxable income — without annual depreciation or amortization.

• For assets with a unit value exceeding RMB 5 million, enterprises may shorten the depreciation or amortization period or adopt accelerated depreciation or amortization methods.

According to the Notice of the Ministry of Finance and the State Taxation Administration on Extending the Preferential Corporate Income Tax Policies for the Hainan Free Trade Port (Cai Shui [2025] No. 3), this policy has been extended until December 31, 2027.

Eligibility Conditions

Entities eligible for this preferential policy include:

1. Enterprises (legal entities) registered in the Hainan Free Trade Port;

2. Secondary branches (non-legal entities) established within the Free Trade Port;

3. Establishments or places of non-resident enterprises located in the Free Trade Port.

Scope of Assets

• Fixed Assets: Non-monetary assets held by enterprises for producing goods, providing services, leasing, or business management, with a useful life exceeding 12 months — including machinery, mechanical equipment, vehicles, instruments, and tools.
  Note: “Fixed assets” under this policy exclude houses and buildings.

• Intangible Assets: Non-monetary long-term assets without physical form, held for business operations, such as patents, trademarks, copyrights, land use rights, non-patented technologies, and goodwill.

Forms of Acquisition

Assets eligible under this policy must be:

• Purchased in monetary form, or

• Self-constructed / self-developed by the enterprise.

They do not include assets obtained through finance leases, donations, equity investments, non-monetary exchanges, or debt restructuring.

Timing of Acquisition

1. Purchased in monetary form: Confirmed based on the date of invoice issuance (unless by installment or credit sale).

2. Installment/credit purchase: Confirmed when the asset is received.

3. Self-constructed fixed assets: Confirmed upon completion and settlement.

4. Self-developed intangible assets: Confirmed when they reach their intended usable state.

Implementation Process

I. Method of Applying for Preferential Treatment

The policy follows a “self-assessment, declaration, and record-retention” approach.
Enterprises determine eligibility on their own, declare the benefit when filing taxes, and keep supporting materials for future inspection — in accordance with the Announcement of the State Taxation Administration on Issuing the Revised Measures for Handling Corporate Income Tax Preferential Matters (STA Announcement [2018] No. 23).

II. Method of Tax Declaration

Eligible taxpayers may declare the preference during both quarterly prepayment and annual final settlement through the online Electronic Tax Bureau system via:

“I Want to Handle Tax Affairs” → “Tax Declaration and Payment” → “Regular Declaration”

(1) Resident Enterprises

1. Non-Consolidated Enterprises (Independent Legal Entities without Branches)

• Quarterly Prepayment:

  • For one-time deductions, fill in Form A201020 – Details of Accelerated Depreciation/Amortization (Deduction) Preferences, Line 2, “One-Time Deduction (2.1 + 2.2 + …)”, selecting “Hainan FTP Enterprise Fixed Asset One-Time Deduction” or “Hainan FTP Enterprise Intangible Asset One-Time Deduction.”

  • For accelerated depreciation/amortization, fill in Line 1, “Accelerated Depreciation/Amortization (excluding one-time deduction – 1.1 + 1.2 + …)”, selecting “Hainan FTP Enterprise Fixed Asset Accelerated Depreciation” or “Hainan FTP Enterprise Intangible Asset Accelerated Amortization.”

• Annual Settlement:
  Complete Form A105080 – Details of Asset Depreciation, Amortization, and Tax Adjustment, filling in:

  • Line 10 – Fixed Asset Accelerated Depreciation

  • Line 13 – Fixed Asset One-Time Deduction

  • Line 31 – Intangible Asset Accelerated Amortization

  • Line 32 – Intangible Asset One-Time Amortization

2. Consolidated Taxpaying Enterprises
Headquarters and branch tax allocations follow Article 18 of the Measures for the Administration of Corporate Income Tax Collection for Cross-Regional Consolidated Taxpaying Enterprises (STA Announcement [2012] No. 57).

• If the head office enjoys the preference — fill in the relevant lines as above.

• If branches enjoy the preference — the head office consolidates and reports the total preferential amount, while branches fill in Lines 21–22 of Form A200000 – Corporate Income Tax Prepayment Return (Category A).

(2) Establishments or Places of Non-Resident Enterprises

1. Independently Taxable Establishments/Places

• Quarterly Prepayment: Fill in Form F100 – Corporate Income Tax Prepayment Return for Non-Resident Enterprises (2019 Edition), reporting the following codes:

  • 04039903 – Fixed Asset One-Time Deduction

  • 04039904 – Intangible Asset One-Time Deduction

  • 04039905 – Fixed Asset Accelerated Depreciation

  • 04039906 – Intangible Asset Accelerated Amortization

• Annual Settlement: In Form F210 – Tax Adjustment Details, report the same codes and corresponding preferential amounts under Line 33, “Reduction Amount for Accelerated Depreciation (Deduction) of Fixed Assets.”

2. Consolidated Taxpaying Establishments/Places
Where a non-resident enterprise operates two or more establishments in China, upon approval from the tax authority, it may file on a consolidated basis:

• Primary establishment: Report in Lines 22–25 of Form F100 (prepayment) and Lines 1–32 of Form F200 (annual settlement).

• Other establishments: Report the apportioned tax share in Lines 26–27 of Form F100, and Line 32 of Form F200 during annual settlement.

Implementation Period

Effective from January 1, 2020, extended to December 31, 2027, according to Cai Shui [2025] No. 3.