The State Administration of Taxation released a Notice on Further Implementation of the Policy of R&D Expenses Super Deduction (Shuizonghan [2016] No. 685, 'This notice') on 21st of December 2016. This notice requires each local tax authority to ensure proper implementation of this preferential policy during the 2016 annual tax filing. No. 685 clarifies that if an enterprise has or is found to have tax related problems in the previous years, the case shall be dealt with separately in accordance with applicable requirements without preventing the enterprise from enjoying the R&D Super Deduction in 2016 in whatever manner. In addition, if an enterprise fails to apply for enjoying the R&D Super Deduction preferential policy in a timely manner in 2016, it may enjoy the policy retrospectively in the next 3 years.

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• Tax authorities at all levels shall step up publicity to keep taxpayers well-informed, further optimise taxation service processes, simplify taxation service procedures and improve the efficiency of taxation services so as to create favourable conditions for enterprises to enjoy the preferential policy of R&D Expenses Super Deduction in a timely and accurate manner. Moreover, tax authorities at all levels shall organise supervision and assessment of the implementation of this preferential policy.
• In implementing the preferential policy, taxation authorities shall verify the information relating to enterprises' enjoyment of the preferential policy in 2016 rather than that in the previous years in principle. If an enterprise has or is found to have tax-related problems in the previous years, the case shall be dealt with separately in accordance with applicable requirements without preventing the enterprise from enjoying the R&D Super Deduction in 2016 in any manner. 
• If an enterprise applies for the preferential policy, but its accounting books/vouchers are not complete, the taxation authorities concerned shall provide coaching, actively make explanations to the enterprise and assist the enterprise in establishing accounts and systems.
• If an enterprise fails to apply for the R&D Super Deduction preferential policy in a timely manner in 2016, it may enjoy the policy retrospectively in the next 3 years.

• This notice implies determination and high awareness of the State Administration of Taxation in implementing the preferential policy of R&D Expenses Super Deduction. Therefore, we recommend that enterprises grasp this opportunity, begin assessing their own R&D activities and expenses as soon as possible and be well prepared for the upcoming application. 
• This notice has emphasised that enterprises which have or are found to have tax-related issues in the previous years could still enjoy R&D Expenses Super Deduction for year 2016. It reduces concerns and fears of enterprises that the tax authorities might reject their application for other tax-related matters.
• Despite this notice encouraging enterprises to apply for the R&D Expenses Super Deduction, enterprises should still apply in an accurate manner based on actual R&D activities conducted and R&D expenses occurred, and contact professional agents if necessary in order to enhance application compliance and reduce risk.
• If an enterprise is not well-prepared to apply for the preferential policy for the financial year 2016, they are still advised to start the preparation as soon as possible so that they could enjoy the policy retrospectively in the next 3 years.