Profit tax – are all expenses tax deductible? (1)

In order to earn profits, taxpayers have to pay expenses to operate the business, but not all expenses are tax deductible. Expenses can be divided into operational nature and capital nature. Expenses of operational nature refer to the expenses incurred in daily operations that can be fully deducted. As for capital expenditure, the depreciation allowance must be calculated according to the three groups listed in Tax Rule 2: 10%, 20% & 30%.

The initial tax allowance for the payment of capital in that year is 60% of the purchase expenses, and the annual tax allowance is available for each year from the year of purchase, which is the percentage of the relevant group listed in the tax rule 2 mentioned above. The annual allowance is calculated by multiplying the remaining value by the percentage of the group: 10% group (devices and machinery) includes elevators, central air-conditioning, etc…. 20% group includes office furniture, electrical appliances, etc…. and vehicles are included in 30% group. In addition, capital expenditures belonging to office or renovation projects can get an annual commercial building tax allowance, which is 4% of the construction cost.

The above information is for reference only. If in doubt, we welcome your tax inquiries