The business entertainment expenses related to the production and business activities of the enterprise shall be deducted according to 60% of the amount incurred, but the maximum shall not exceed 5‰ of the sales (business) income of the year. During the preparation period of the enterprise, the business entertainment expenses related to the preparation activities can be included in the enterprise preparation expenses according to 60% of the actual amount, and deducted before tax according to the relevant regulations. For enterprises engaged in equity investment business (including headquarters of group companies, venture capital enterprises, etc.), the deduction limit of business entertainment expenses can be calculated according to the prescribed proportion of dividends, bonuses and equity transfer income distributed by the invested enterprises.

Business entertainment expenses refer to the entertainment expenses paid by enterprises for the reasonable needs of production and business operation.

Business entertainment expenses are the entertainment expenses paid by enterprises for the reasonable needs of business operation. Before this financial system reform, there was no uniform standard for business entertainment expenses of all kinds of enterprises in China. Except for the expenditure standard for business entertainment expenses in the income tax law of foreign-invested enterprises, there were basically no standards for other kinds of enterprises (1Interim Provisions on Several Issues of Financial Management of Joint-stock Pilot Enterprises promulgated in June 1992 adopted the standards of foreign-invested enterprises). The business entertainment expenses of state-owned enterprises shall be determined by the financial departments of provinces, autonomous regions and Zhizhi City according to different situations such as the scale of production and operation of enterprises, and the entertainment expenses of enterprises shall be reimbursed within the limits and audited at the end of the year. This management method is not conducive to creating an external environment of equal competition for all kinds of enterprises, nor is it conducive to the transformation of government functions and strengthening financial supervision. This financial reform has unified the business hospitality standards of various enterprises.

The current tax law stipulates:

Article 43 of the implementation regulations clearly stipulates that the business entertainment expenses related to production and business activities of enterprises shall be deducted according to 60% of the amount incurred, and the maximum amount shall not exceed 5‰ (five thousandths) of the sales (business) income of the year.

Business entertainment is a business that often happens for the purpose of contacting business or promoting sales, dealing with social relations, etc. The new Regulations on the Implementation of the Enterprise Income Tax Law has changed the previous deduction ratio. As a reasonable expense of enterprise's production and operation, business entertainment can be truthfully charged according to the accounting system, and the tax law stipulates that it can be deducted before income tax within a certain proportion, and the part exceeding the standard cannot be deducted.