Legal basis: Regulations on the Implementation of Enterprise Income Tax Law of People's Republic of China (PRC);
Article 20 The term "income from royalties" as mentioned in Item (7) of Article 6 of the Enterprise Income Tax Law refers to the income obtained by enterprises from providing the right to use patents, non-patented technologies, trademarks, copyrights and other franchises.
Royalty income shall be recognized according to the date when the concessionaire pays the royalties as agreed in the contract.
Forty-ninth management fees paid between enterprises, rents and royalties paid between internal operating institutions of enterprises, and interest paid between internal operating institutions of non-bank enterprises shall not be deducted.