Two departments: The tobacco advertisement fees and business promotion expenses of tobacco companies shall not be deducted when calculating the taxable income.

On December 29th, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on the Pre-Tax Deduction of Advertising Expenses and Business Promotion Expenses". It is proposed that for cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcohol manufacturing) enterprises, advertising expenses and business promotion expenses incurred shall be deductible up to 30% of the current year's sales revenue; any excess amount may be carried forward for deduction in subsequent tax years. Tobacco enterprises' advertising expenses and business promotion expenses shall not be deductible when calculating taxable income. This announcement shall be effective from January 1, 2026 to December 31, 2027. The full text is as follows: Announcement on the Pre-Tax Deduction of Advertising Expenses and Business Promotion Expenses Announcement No.16 of 2025 by the Ministry of Finance and the State Administration of Taxation In accordance with the "Enterprise Income Tax Law of the People's Republic of China" and its implementing regulations, the matters related to the pre-tax deduction of advertising expenses and business promotion expenses are hereby announced as follows: 1. Advertising expenses and business promotion expenses incurred by cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing enterprises (excluding alcohol manufacturing) may be deducted up to 30% of the current year's sales revenue; any excess amount may be carried forward for deduction in subsequent tax years. 2. For related enterprises that have signed advertising expense and business promotion expense sharing agreements (hereinafter referred to as sharing agreements), the advertising expenses and business promotion expenses incurred by one party within the pre-tax deduction limit of the share of the current year's sales revenue may be deducted by this enterprise, or some or all of it may be allocated to the other party for deduction according to the sharing agreement. When calculating the pre-tax deduction limit of advertising expenses and business promotion expenses of this enterprise, the other party may exclude the advertising expenses and business promotion expenses allocated to this enterprise according to the above method. 3. Advertising expenses and business promotion expenses of tobacco enterprises shall not be deductible when calculating taxable income. 4. This announcement shall be effective from January 1, 2026 to December 31, 2027. The "Announcement on the Pre-Tax Deduction of Advertising Expenses and Business Promotion Expenses" (Announcement No.43 of 2020 by the Ministry of Finance and the State Administration of Taxation) shall be repealed from January 1, 2026. This announcement is hereby made. Ministry of Finance and State Administration of Taxation December 22, 2025 Source: Ministry of Finance website, GMTEight Editor: Feng Qiuyi.