Concealed expenses, that is, commercial bribery, shall not be deducted before tax. The Official Reply of the State Administration of Taxation on How to Deal with Enterprise Sales Discount in the Collection of Income Tax (Guo Shui Han [1997] No.472) stipulates that the expenses of taxpayers' rebates for selling goods to buyers shall not be charged before income tax. Article 6 of the Measures for Pre-tax Deduction of Enterprise Income Tax in State Taxation Administration of The People's Republic of China (Guo Shui Fa [2000] No.84) also clearly stipulates that illegal expenses such as bribery shall not be deducted when calculating enterprise income. Article 10 of the Enterprise Income Tax Law of the People's Republic of China stipulates that other expenses unrelated to income acquisition shall not be deducted before enterprise income tax. Concealed expenses, that is, commercial bribery, are other expenses unrelated to income acquisition and obviously cannot be deducted before income tax.

The pre-tax deduction of deducted expenses shall comply with relevant tax regulations. Article 8 of the Anti-Unfair Competition Law stipulates that an operator may give a discount to the other party in an express way or give a commission to an intermediary when selling or buying goods. If the operator gives the other party a discount or a commission to the middleman, it must be truthfully accounted for. Operators who accept discounts and commissions must truthfully account for them. The Reply of the State Administration of Taxation on How to Deal with Enterprise Sales Discount when Collecting Income Tax (Guo Shui Han [1997] No.472) stipulates that if the sales discount of taxpayers selling goods to buyers is indicated on the same sales invoice, the income tax can be calculated and paid according to the discounted sales; If the discount amount is invoiced separately, it shall not be deducted from the sales amount. In addition, regarding the treatment of value-added tax, State Taxation Administration of The People's Republic of China's notice on printing and distributing the Provisions on Several Specific Issues of Value-added Tax (Guo Shui Fa [1993]No. 154) stipulates that taxpayers sell goods at a discount, and if the sales amount and the discount amount are indicated separately on the same invoice, value-added tax can be levied according to the discounted sales amount; If the discount amount is invoiced separately, no matter how it is handled financially, it shall not be deducted from the sales amount.