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6.5.2. Non-Deductible Items

The following are not deductible when calculating taxable income:

  • Losses incurred by an enterprise from its overseas operating units cannot be deductible against the enterprise's domestic profit;
  • Dividends income from private and listed enterprises and other distributions with respect to equity interests paid to investors;
  • Corporate income tax payments;
  • Surcharge on late tax payments;
  • Fines, penalties and losses incurred through confiscation of property;
  • Unqualified donations;
  • Sponsorship fees;
  • Unapproved provisions; and
  • Other expenditures not incurred for the purpose of earning income.

Sponsorship fees refer to various expenditures incurred by an enterprise having a non-advertising nature and being irrelevant to the manufacturing or business operating activities.

Unapproved provisions refer to various provisions which are not stipulated by the government authorities of the State Council in charge of finance and taxation, such as reserves for assets impairment, risk reserves, etc.