The finance and tax questions manufacturers ask most

What should a factory watch for in the tax treatment of a relocation?

First decide whether it is a policy relocation: a government-led move in the public interest, backed by supporting documents, is accounted for separately under STA Announcement No. 40 of 2012; income and costs during the move stay out of current taxable income and the relocation gain is settled in the year the move is completed. If it cannot be accounted for separately, it is treated as a non-policy relocation and does not qualify.

Keep compensation income, relocation costs, disposals and replacement spending separate, with an unbroken chain of evidence from the government document and compensation agreement to the replacement invoices.
A relocation is also the best moment to rebuild equipment asset cards and recompute the cost structure.
Yidao has built a relocation ledger and an equipment asset system for an electrical appliance maker in Jiangsu.

This page is general information only and is not tax, legal or accounting advice on any particular matter. Policy references reflect the documents in force at the time of writing; how they apply depends on the company's facts and on the local tax authority.

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