ChinaFIG investment advisors provide guidance to organizations on China policies and procedures related to China investments, WFOEs, China joint ventures and China taxes.
Foreign Invested Enterprise – Entertainment Tax Deductions
Deductions for entertainment expenses are limited to thresholds, based upon revenue or profit, as follows:
Revenue Method
For organizations with revenue of less than 15M RMB, deductible entertainment expenses may not exceed 1% of sales. For organizations with revenue of greater than 15M RMB, 1% for the first 15M RMB and 0.3% for the amount in excess of that figure.
Profit Method
For organizations with profit less than 5M RMB, deductible entertainment expenses may not exceed 1% of profit. For organizations with revenue of greater than 5M RMB, 1% for the first 5M RMB and 0.5% for the amount in excess of that figure.
Entertainment expenses in excess of the above noted thresholds are not deductible.