Two departments: Tobacco advertising expenses and business promotion expenses of tobacco companies must not be deducted when calculating taxable income

The Zhitong Finance App learned that on December 29, the Ministry of Finance and the State Administration of Taxation issued a “Notice Concerning Pre-tax Deduction of Advertising Expenses and Business Promotion Expenses”. Among them, it is proposed that advertising expenses and business promotion expenses incurred by cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcohol manufacturing) enterprises shall be deducted for no more than 30% of the current year's sales (operating) revenue; the excess portion will be allowed to be carried forward and deducted in subsequent tax years. Tobacco advertising expenses and business promotion expenses of tobacco companies shall not be deducted when calculating taxable income. The announcement will be implemented from January 1, 2026 to December 31, 2027.

The original text is as follows:

Notice on matters relating to the pre-tax deduction of advertising expenses and business promotion expenses

Ministry of Finance and State Administration of Taxation Notice No. 16 of 2025

According to the “Corporate Income Tax Law of the People's Republic of China” and its implementing regulations, the following matters relating to the pre-tax deduction of advertising fees and business promotion expenses are hereby announced:

1. The portion of advertising expenses and business promotion expenses incurred by cosmetics manufacturing or sales, pharmaceutical manufacturing, and beverage manufacturing (excluding alcohol manufacturing) enterprises shall not exceed 30% of the current year's sales (operating) revenue shall be deducted; the excess portion shall be carried forward and deducted in subsequent tax years.

2. For related enterprises that have signed an advertising fee and business promotion fee sharing agreement (hereinafter referred to as an apportionment agreement), advertising expenses and business promotion expenses incurred by one party not exceeding the pre-tax deduction limit ratio of sales (operating) income for the current year may be deducted by the enterprise, or part or all of them may be collected and deducted by the other party in accordance with the apportionment agreement. When calculating the enterprise's advertising expenses and business promotion expenses before corporate income tax deduction limits, the other party may exclude the company's advertising expenses and business promotion expenses according to the above method.

3. Tobacco advertising expenses and business promotion expenses of tobacco companies shall not be deducted when calculating taxable income.

4. This announcement will be implemented from January 1, 2026 to December 31, 2027. The “Notice of the Ministry of Finance and the State Administration of Taxation on Matters Relating to Pre-tax Deduction of Advertising Expenses and Business Promotion Expenses” (Ministry of Finance and State Administration of Taxation Notice No. 43 of 2020) was abolished on January 1, 2026.

We hereby announce it.

Ministry of Finance and General Administration of Taxation

December 22, 2025

This article was selected from the “Ministry of Finance” official website, Zhitong Finance Editor: Feng Qiuyi.