【作 者】
Youtang Zhang（Tutor of Doctorate Candidate），Liu Ya
【作者单位】
（School of management，Wuhan University of Technology，Wuhan，P.R.China，430070）
【摘 要】
Abstract: In the age of information economy, the deduction policy of enterprises" R&D expenditure plays an important role in encouraging technology company to innovate and promoting the technology. However, with the deepening of policy implementation, the main subjects, science and technology department, tax department, and technology company, are having some problems, which has a negative impact on the implementation of the deduction policy. This paper reorganizes the main policy of enterprises" R&D expenditure deduction and analyses the reality that "three party" are facing, then gives some advice to the regulation of R&D expenditure deduction policy.
Keywords: R&D expenditure deduction； tax motivation； policy implementation
1. Introduction
To propel the enterprises to increase the innovation expense, master the core technology, and boost the market competitiveness, countries all over the world encourage enterprises to invest innovation by multiple tax motivation policy. And the enterprises" R&D expenditure deduction policy is one of widely used policy tool. Moreover, this policy is an significant move in our country to encourage and support enterprises to innovate. However, the major part of enterprises" R&D expenditure tax motivation, "three party"——"science and technology department, tax department, and technology company", are facing realistic problems during the policy implementation which impedes the process of full implementation.
Hence, it"s important and necessary to reorganize the R&D expenditure deduction policy, summarize the problems of the implementation and make suggestions. This paper is making efforts to set the management regulation of the implementation of technology companies" R&D expenditure deduction policy. As is shown in chart 1.
2.The evolution and analysis of technology company"s R&D expenditure deduction policy
2.1 The evolution of R&D expenditure deduction policy
Since 1996, the R&D expenditure deduction policy came into effect in China. It has three stages after the reform. As is shown in table 1.
2.2 The analysis of R&D expenditure deduction policy
In China, the deduction policy started in 1996. In 2008, the new Enterprise Income Tax Law came into effect which is the first time in China to uniform and regulate the enterprise R&D expenditure deduction issue in the form of tax law. Therefore, the complete system is emerging(as is shown in table 2). At present, the multiple levels system of R&D expenditure deduction is formed based on four levels, law, administrative regulation, national department regulation, and local regulation, which guarantees the preferential policy of enterprises and thorough implementation of relative departments.
(1)Relax the restriction of deduction subjects, expand the scope of benefit
It mainly manifests in: firstly, resident companies with a sound financial accounting system and can sum up the R&D expenditure accurately are able to enjoy the preferential policy, as long as they have projects to innovate and develop new technology, new products and new process. The new policy is equal to money-making and money-losing companies which broadens the scope of benefit and make ore companies to enjoy the preferential policy. Secondly, the limitation of 10% growth over the previous year is removed which takes a further step to expand the scope of benefit and makes the management of tax department more convenient.
(2)Regulate the scale of research and development activity with high operability
First of all, we should make sure the concept of research and development activity, which refers to enterprises choose to conduct with the intention of gaining new technology and science(culture and social science are not included) that can either lead to the development of new products or procedures, or to improvement of existing products(service) or procedures. Secondly, it emphasizes the contribution that enterprises made for the local scientific development which is the worthwhile result and value of technology, craft and product made by research and development activities. Moreover, it should promote the development of local(province, autonomous region, municipality or the cities under separate planning) industry. Thirdly, it sets a high entry standard. The research and development activity is limited in the High Technology Field Supported by Government and the Guideline of Current Prior Development Areas of High Technology(2007).
(3)The deduction procedure is improving. It evolves from the review and approval system to records system which makes it easier for enterprises to enjoy the preferential policy. From 1996 to 2004, the deduction of enterprises" R&D expenditure is mainly reviewed and approved by tax bureau. Since 2005, the self-assessment deduction is available. Taxpayer can deduct independently based on the preferential tax policy, and the follow-up management will be conducted by tax bureau.
3. Analysis of the "Three Party" reality of the policy implementation of R&D expenditure deduction
Recently, though the technology enterprises" R&D expenditure deduction policy is improving, the effect is not as well as we expected, on the whole. According to the research, science and technology department, tax department, and technology company are all facing practical problems.
3.1 Analysis of the reality of science and technology department
(1)Tedious application process of establishing R&D projects
Though the deduction policy frame is coming into being, there is no integrated regulation file. Documents in government level is vague while local government has no matching implementation regulations. Transparent and effective application process has not established. Some technology enterprises think that the current policy is not clear enough, and they have no concept about the preferential items, necessary materials and application process. Some companies regard this procedure as tedious and complicated. The application procedure on Internet is difficult to operate and there is no instruction of filling the tables. The existence of those problems increase the application costs of deduction which influences the enterprises" enthusiasm of research and develop. Hence, the science and technology department, as the main subject, is not functioning well. The implementation effect still could be improved.
(2)Unclear function of R&D management subject
In deduction policy management, the research and development activity is regard as a professional and technical job. At present, the review and approval work of R&D project is charged by tax department while science and technology department is in charge of the record of R&D projects. Therefore, it"s difficult for tax department to review and approve due to the lack of professional skills. For instance, whether the R&D activities and projects substantially improve the technology, craft and product or whether the projects propel the local industry, it"s hard to reach the agreement between the tax department and enterprises. And usually when the disagreement emerges, the projects and activities will be evaluate by science and technology department. In National tax[2008] NO.116 Article 13, tax department may require the appraisal opinion of enterprises offered by science and technology department under the condition that tax department has dissent about the projects. Nevertheless, the science and technology department sometimes has no specific instruction, and the dissent processing is not complete which can lead to the inadequate implementation.
3.2 Analysis of the reality of tax department
(1)The policy implementation management is disjointed and immature
Though the current tax policy formulates some regulations about deduction policy, it neglects the arrangement of tax department. The poor arrangement about initiation, research and development and result of tax department can directly cause the flaws of daily tax arrangement and the high risk.
At present, the R&D deduction projects administrate by putting in the record after the event. Tax department will adjust the deduction amount when it comes to the auditing. In this way, the procedure is simple and time-saving. However, the tax department has no access to audit the projects substantially, the only way to adjust and pay the overdue tax is to recheck after the auditing, which may result in the concern about deduction application and giving up the preferential treatment.
(2)The standard of tax department and enterprises is inconsistent
According to the tax law, the tax department is in charge of the auditing of the R&D expenditure. The deduction policy of tax department is based on Measures for Pre-tax Deduction of Enterprises" R&D Expenditure(National Tax[2008] NO. 116, hereafter referred to NO.116) and Circular of Ministry of Finance and State Administration of Taxation on Pre-tax Deduction of R&D Expenditure Policy (Finance and Tax[2013] NO.70, hereafter referred to NO.70). Yet, general accountants of enterprises audit based on Opinions of the Ministry of Finance on Reinforcing the Financial Management of the Enterprises" R&D Expenditure(Finance and Tax[2007] NO.194, hereafter referred to NO.194), and the tax collection is based on NO.116 and NO.70. The audit and collection of technology enterprises" R&D expenditure is based on Guidelines on the Management of High-tech Enterprise(National Tax[2008] NO.362, hereafter referred to NO.362). However, the deduction of tax department is based on NO. 116 and NO.70, thus the following items involved in NO.194 and NO.362 cannot be deducted:
①Costs of indirectly related technical books, materials and translation. If the contents of materials and translation are not related to the research and development projects, the expense cannot be deducted.
②Costs of indirectly consumed materials, fuel, and impetus. If the research agency of the enterprises use the car to pick up the researchers but not for the R&D activities, the expense cannot be deducted.
③Non-direct researchers" salary, wage, bonus, allowance and subsidy.
④The external researchers" salary, wage, bonus, allowance and subsidy.
⑤Instruments, devices, software, and intangible assets like patent and non-patent technology used for R&D activities, as well as mold and process equipment used for intermediate experiment and trail production are not supposed to have other utilization. The depreciation and rent expense of these equipment and devices and the adjustment and inspection costs of the mold and process equipment cannot be deducted.
⑥The depreciation and rent expense of other capital assets used for R&D activities like building, architecture and transportation, the reparation and repack cost as well.
⑦The application, register, and commission charge of intellectual property and so on.
⑧Any cost of activities that directly related to the research, like the expense of conference, business, travel, entertainment, correspondence, external affair, training, consult, insurance and so on.
As for the inconsistent standard of tax department and enterprises, it becomes much harder for tax department to audit the R&D expenditure, to some extent.
3.3 Analysis of the reality of science and technology company
(1) The limit policy apply scope and high standard of project approval restrict the initiative of the R&D activities
According to No.116, the R&D privilege needs two identifications.
Firstly, it needs a "general identification". It refers to enterprises choose to conduct with the intention of gaining new technology and science(culture and social science are not included) that can either lead to the development of new products or procedures, or to improvement of existing products(service) or procedures. Moreover, it should promote the local relative industry(regular upgrade and direct application are not included). On one hand, this identification impedes the establishing of the project. Companies set up some projects to innovate which can improve their product and process technique and bring more profit. Yet, sometimes it cannot reach the standard of "promote the local relative industry". On the other hand, it expels the "regular upgrade". The regular upgrade of product is the most common way for enterprises to raise market competitiveness, but the R&D expense is very high and there is no privilege which has a negative influence on research initiative. What"s more, it requires "valuable achievement". Initiative research usually takes large amount of capital and is very risky. If only under the condition that "valuable achievement" is gained, the R&D expenditure can be deducted, the policy effect is against the encouragement of technology innovation.
Secondly, it needs a "specific identification". It requires the research and development activity is limited in the Guideline of Current Prior Development Areas of High Technology and the High Technology Field Supported by Government. Therefore, the preferential policy is not open to all, it aims at some specific fields. Most small and medium-sized enterprises are difficult to reach the standard which reveals the flaws of the tax motivation policy system.
(2)The R&D research expenditure collection is not accurate which may result in tax risk.
Article 10 of NO.116: enterprises must have a specific account for R&D expenditure, and simultaneously collect and fill in the actual deduction amount of R&D expenditure based on the items in addendum of this regulation. If the amount is fake or the materials are not complete, enterprises are not allowed to enjoy the deduction. And the tax department has the right to regularize the enterprises" declaration.
However, during the practical financial accounting, many technology companies do not have specific accounts, they also do not list the "R&D expenses" and details in accordance with the accounting principle. This is because the enterprises" ability of collecting cost information and the staff quality are non qualified. "Intersected expense" of the R&D expenditure is hard to allocate, some enterprises even enlarge the collection scope which may increase the technology company"s tax risk, to some extent.
When the tax department is auditing the R&D expenditure deduction, if the deduction is against the tax law and regulation, enterprises will face the risk of paying an overdue tax, penalty, overdue fine, receiving punishment and ruining reputation. On the other hand, if the enterprises don"t respect tax law or don"t commit the materials timely, they will face an over charge.
4. The "Three Party" Strategy Research of Enterprises" R&D Expenditure Tax Motivation Policy Implementation
From the analysis above, we can see that the regulation of auditing of enterprises" R&D expenditure deduction should be based on the rational standard of identification and allocation. Meanwhile, the accounting principle and accounting system of R&D expenditure collection convergence should be valued. This paper is making efforts to design a set of standard procedure for R&D expenditure deduction accounting business in three levels, science and technology department, tax department and technology company.
4.1 Science and Technology Department
Science and technology department should cooperate with tax department to reach an agreement in deduction policy and high-tech enterprise identification policy, an narrow the identification scope of R&D expenditure deduction. Set up an identification institution leading by science and technology department, working with tax and related departments. Moreover, we should propel an enterprise project management system with an international standard and administrate the whole process of the research project. As is shown in chart 2.
4.2 Tax Department
Tax department should strengthen the guidance, and lay stress on the standardized operation. The collection of R&D expenditure should be based on accounting principle, accounting auditing and specific account. Meanwhile, we should take step to make the convergence of enterprise auditing, high-tech enterprise identification and income tax deduction standard. Furthermore, the details of auditing should be formulated. For instance, set up the title of accounting detail, accounting principle of R&D activity, items of research expense and allocation principle of R&D expense. We should work on training course in the way of taking courses, thematic seminar and coaching, especially enhance the training of accounting staff and make sure the accuracy of auditing and collection. Considering the poor condition of small and medium-sized enterprise and private enterprise, we will lay much emphasis on their training and development. In addition, we should boost the coordination between science and technology department and tax department, and come up with the solution of disconnection of relative policy. Simplified identification procedures and lower the policy execution cost. As is shown in chart 3.
4.3 Technology Company
(1)Enterprise must have specific account for R&D expenditure
Technology company should set a collection and auditing account for R&D expenditure in accordance with the research project or the company in charge of researching. And create a detail accounting with valid certification in corresponding. To make sure the accurate expense collection, company should set a cost account "R&D expense". Set the concrete research items as secondary account and "expensed cost" and "capitalized cost" as third level. On that basis, set the detail content of R&D expenditure as fourth level. For the part that is qualified to be capitalized, it can be accounted as intangible assets.
(2)Complete the internal arrangement system
For instance, company can promote the implementation of scientific research project management provision, research center management provision, R&D expenditure auditing system, budget and financial statement system, research reward system, evaluation of scientific researcher and so on, especially should complete the internal control system. Besides, company should establish an internal coordination mechanism. The planning department, finance department, R&D department, production department and human resource department work together to achieve the accurate and effective auditing and collection, and defend the corporate interests.
References
Peng Han. Comparison on Accounting Operation of Independent, Commission and Cooperation R&D［J］. Finance and Accounting Monthly,2012(4)．
Fenglin Xu, Chenchen Lin. On perfection of Enterprise R&D Expenditure Deduction Policy［J］. Finance and Accounting Monthly,2011(5)．
Jingfei Li. Income Tax Adjustment on Intangible Assets Amortization of “Three New” R&D Expenditure［J］. Finance and Accounting Monthly,2010(11)．
Fund Program: Technology supporting soft science and research project in Hubei Province "Case of R&D expenditure deduction policy implementation of enterprise in Hubei Province"(NO. 2015BDF018)
