R&D Expense Super Deduction — Project Assessment Cases (Volume 2)

研发费用加计扣除项目鉴定案例（第二辑）

Source (Chinese): STA Policy Database — 政策解读 (Income Tax Division, December 13, 2024)

English translation: Independent translation. Not an official government translation.

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In recent years, the government has continuously increased the preferential treatment for the R&D expense super deduction policy. The science and technology and tax authorities have thoroughly implemented the decisions and deployments of the Third Plenary Session of the 20th CPC Central Committee, leveraging inter-departmental cooperation and implementing the R&D project assessment mechanism. Building on the first batch of R&D project assessment cases published in 2023, the Department of Policy, Regulation and Innovation System Building of the Ministry of Science and Technology and the Income Tax Division of the State Taxation Administration have once again selected and compiled 3 representative cases from expert-assessed R&D projects, providing detailed explanations of the assessment criteria to help taxpayers better understand the characteristics of R&D activities and accurately apply the R&D expense super deduction policy.

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Case 1: Laser Particulate Matter Sensor

I. Basic Project Information Provided by the Enterprise

(1) Project R&D Objectives and Content

The enterprise's analysis determined that, in the current domestic market for air monitors and air purifiers, the sensors used for detecting air particulate matter composition and mass are mainly based on infrared scattering technology. While low in cost, they lack sufficient accuracy. Laser-based particulate matter detection technology can also be used for air quality monitoring, but is primarily used in large-scale instruments and equipment, and is rarely applied in miniaturized sensors. Based on this analysis, the enterprise proposed the R&D objective of developing a miniaturized laser particulate matter sensor.

(2) Core Technologies and Innovation Points the Enterprise Sought to Breakthrough

The enterprise identified the core technology of the project as laser particulate matter sensor technology. The technological innovation points include: first, structural miniaturization and integration technology, achieved through various technical means; second, precision particulate matter measurement technology, employing self-calibration and self-compensation technology to ensure product consistency, with the addition of specialized devices in the air pathway structure to improve measurement accuracy; third, high-precision calibration and testing technology, including the original creation of multi-concentration, multi-parameter, mixed particulate matter calibration methods, among others.

(3) Technical Specifications Achieved

Through the project R&D, the enterprise reported that its laser particulate matter sensor achieved the following: in terms of miniaturization, 9 preset technical specifications were met, including DC supply voltage, operating current, standby current, data interface level, operating temperature range, operating humidity range, storage temperature range, mean time between failures, and maximum dimensions; in terms of particulate matter measurement, 7 preset technical specification breakthroughs were achieved, including measurement range, counting efficiency, particulate matter mass concentration effective range (PM2.5 standard value), particulate matter mass concentration maximum range (PM2.5 standard value), particulate matter mass concentration resolution, particulate matter mass concentration consistency (PM2.5 standard value), and calibration volume.

II. Expert Assessment Results

The project was submitted to the science and technology department for expert assessment. The experts determined it constitutes an R&D activity. The experts' reasoning was as follows:

(1) The Project Has a Clear Innovation Objective

The project aims to develop a laser particulate matter sensor with superior performance and low cost, which will fill a gap in domestic upstream core components and sensor fields, while providing core technology support for the smart functionality of household and vehicle-mounted air purifiers, air conditioners, and other products.

(2) The Project Has a Systematic Organizational Structure

1. The project feasibility study report was prepared by the R&D department and approved through a project initiation resolution by the enterprise's authorized decision-making body.

2. The project was organized and implemented by the R&D department, with an R&D team comprising personnel from circuit design, structural design, software, algorithm design, and other relevant areas. The team configuration was reasonable, with comprehensive professional coverage and clear division of responsibilities.

3. The enterprise's existing technology accumulation, technical equipment, facilities, and other hardware and software resources met the necessary conditions and capabilities for R&D.

(3) The R&D Outcome Has Uncertainty

The project planned the R&D schedule over a three-year implementation period from "product design" to "batch production," with necessary testing and improvements at each stage, progressively achieving the target technical specifications. After project completion, external experts were engaged to conduct acceptance review, which was passed.

(4) Supporting Documentation

The enterprise has successfully filed a patent application for the technology.

Conclusion: The project initiation basis is adequate, the R&D content and objectives are clear, and the technology demonstrates a certain degree of advancement and innovation. The project was completed and accepted as required, achieving the expected results, and a patent has been successfully applied for. The experts assessed this project as constituting an R&D activity, eligible for the R&D expense super deduction policy.

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Case 2: Selective Breeding of Premium Cordyceps Flower New Strains

I. Basic Project Information Provided by the Enterprise

(1) Project R&D Objectives and Content

The enterprise's analysis determined that the novel edible mushroom variety Cordyceps flower (Cordyceps militaris) has promising development prospects in the domestic edible mushroom industry. The enterprise proposed the following R&D objectives: first, to employ domestication breeding, mutagenesis breeding, and hybridization breeding techniques to select and breed new Cordyceps flower varieties and obtain strains stable enough for large-scale production; second, to conduct pilot production verification over a one-year period in a pilot workshop to determine the stability of the selected strains and processes; third, to identify the production parameters required for subsequent large-scale production and research the necessary supporting equipment and facilities, providing technical support for the construction of large-scale automated smart factories for Cordyceps flower production.

(2) Core Technologies and Innovation Points the Enterprise Sought to Breakthrough

The enterprise identified the core technology breakthrough of the project as relocating Cordyceps flower production southward, bringing fresh Cordyceps flower products closer to core market areas. The technological innovation points include: first, employing multiple traditional breeding techniques combined with molecular marker-assisted breeding to select and breed premium new Cordyceps flower strains; second, establishing a multi-dimensional environmental factor synergistic regulation-based large-scale cultivation technology system to achieve high-quality and efficient large-scale Cordyceps flower production; third, introducing a new automated assembly-line production model to significantly improve production efficiency.

(3) Technical Specifications Achieved

Through the project R&D, the enterprise substantially achieved the 3 core technical specifications set out in the R&D objectives, identified 2 new varieties suitable for large-scale production, drafted 2 quality standards, and developed 6 production technical protocols.

II. Expert Assessment Results

The project was submitted to the science and technology department for expert assessment. The experts determined it constitutes an R&D activity. The experts' reasoning was as follows:

(1) The Project Has a Clear Innovation Objective

The objective of this project is to achieve a breakthrough in factory-based Cordyceps flower production technology in southern regions closer to core markets. During implementation, 2 new varieties suitable for large-scale production were identified and applications for plant variety right protection were filed. Two quality standards were drafted, of which the industry standard for Cordyceps (GH/T standard) represents the highest standard in the industry. Six production technical protocols were developed. The project R&D substantially achieved the 3 core technical specifications proposed in the objectives.

(2) The Project Has a Systematic Organizational Structure

1. The project plan was prepared by the R&D department, discussed and confirmed at an expert meeting, and approved through a board of directors resolution.

2. The project was organized and implemented by the R&D department, with an R&D team comprising personnel from strain preparation, bottling, inoculation, environmental control, packaging, and other relevant areas. The team configuration was reasonable, with comprehensive professional coverage and clear division of responsibilities.

3. The enterprise's existing technology accumulation, equipment, facilities, and other hardware and software resources met the necessary conditions and capabilities for R&D.

(3) The R&D Outcome Has Uncertainty

The project planned the R&D schedule over a two-year implementation period from "data review and process design development" to "small-batch pilot production," with necessary testing and improvements at each stage, progressively achieving the target technical specifications. After project completion, external experts were engaged to conduct acceptance review, which was passed.

(4) Supporting Documentation

The enterprise has achieved multiple results in variety right protection, standard development, and production process protocol development:

1. Two innovative strains were bred, and both have been filed for plant variety right protection, receiving preliminary examination approval notices.

2. The enterprise participated in drafting an industry standard for Cordyceps (which has been published and implemented) and completed the drafting of a local standard for factory-based Cordyceps flower production technical protocols.

3. Six standard operating procedures were developed, including the Production Strain Preparation Process Operating Procedure, Fermentation Tank Process Operating Procedure, and Ingredient Formulation Process Operating Procedure, forming a complete set of Cordyceps flower production processes.

Conclusion: The project initiation basis is adequate, the R&D content and objectives are clear, and the technology demonstrates a certain degree of advancement and innovation. The project was completed and accepted as required, achieving the expected results, and has generated R&D outputs including plant variety rights, quality standards, and production technical protocols. The experts assessed this project as constituting an R&D activity, eligible for the R&D expense super deduction policy.

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Case 3: Integrated Spray-and-Surge Raisin Washing Device

I. Basic Project Information Provided by the Enterprise

(1) Project R&D Objectives and Content

During raisin processing, cleaning is typically performed through manual rinsing and stirring. The enterprise proposed the R&D objective of developing an "integrated spray-and-surge raisin washing device" — a piece of cleaning equipment that integrates spraying and surge washing to achieve rapid raisin cleaning, thereby facilitating subsequent processing and reducing labor input.

(2) Core Technologies and Innovation Points the Enterprise Sought to Breakthrough

The device uses a cleaning tank and cleaning pipe combination so that raisins move together with the water flow for surge-style cleaning. A spray tank is set up to spray the raisins, rinsing and removing stubborn impurities adhering to the raisin surface, ensuring thorough cleaning.

(3) Target Technical Specifications

No quantitative technical specifications were set. The enterprise estimated that the project R&D would result in the filing of 1 invention patent and 2 utility model patents, and that the developed device would be put into production, with an estimated RMB 500,000 in new sales revenue.

II. Expert Assessment Results

The project was submitted to the science and technology department for expert assessment. The experts determined that the project lacks innovation and does not constitute an R&D activity. The main reasons are as follows:

(1) The Project Objective Does Not Demonstrate Innovation

The integrated spray-and-surge raisin washing device project primarily involves developing a raisin washing device, with the goal of optimizing the raisin processing and cleaning workflow and improving batch cleaning efficiency. Multiple methods for raisin cleaning currently exist. From a structural perspective, this device simply adds a spray unit and spray tank (equipped with spray nozzles, high-pressure nozzles, and a high-pressure blower) to an existing surge-type water pump cleaning device, amounting to a simple combination and optimization of existing technology with additional components.

(2) Deficient Project Organization and Implementation Documentation

The project equipment was not sufficiently analyzed from the perspective of the technical implementation pathway. Only the project initiation report, overall equipment design, and drawings were presented. No resolution documents, R&D process logs, progress reports, test records, or specific benefits achieved during implementation were provided. No quantitative technical specifications were established during the implementation process.

(3) The R&D Outcome Does Not Demonstrate Uncertainty

This device, serving as raisin cleaning equipment, adds additional processes to existing equipment and combines two cleaning methods. The fundamental functionality of the equipment has not changed, and the characteristics of R&D outcome uncertainty are not demonstrated.

Conclusion: This project lacks innovation and falls within the scope of Paragraph 4 of Sub-article (2) of Article 1 of the Notice of the Ministry of Finance, State Taxation Administration, and Ministry of Science and Technology on Improving the Policy for Pre-tax Super Deduction of R&D Expenses (Cai Shui [2015] No. 119), which states that "repetitive or simple modifications to existing products, services, technologies, materials, or processes" under the "activities not eligible for the pre-tax super deduction policy." This is not a qualifying R&D activity and is not eligible for the R&D expense super deduction policy.