State Administration of Taxation promulgated in 2010, the State Administration of Taxation on Issuance of Notice of "Tax Representative Offices of Foreign Enterprises Interim Measures" (Guo Shui Fa [ 2010 ] No. 18, hereinafter referred to “New Approach”) which abolish the GSF  28 regulations, there is no longer to operate according to the operating nature of the representative bodies but in accordance with the financial accounting standards specified in different method of taxation.
For those items translated into expenditure when calculating the paid income tax, the representative body must state clearly the amount of the expenditure covered in content. Under the New Approach: Expenditures of representative bodies include: onshore or offshore wages payment, bonuses, allowances, benefits, procurement expenses (including automobiles, office equipment and other fixed assets), communications, travel, rent, equipment or rental fees, travel expenses, entertainment expenses, and other expenses.
We have to exercise caution when calculating the following expenditure items:-
- 1) With effect from 1 January 2010, representative bodies incur expenditure by purchasing fixed assets as well as the establishment of representative offices or when relocation which cause renovation expenses should charge the amount only once for income tax. Under the New Approach, it cancelled the State Administration of Taxation  No. 63, which is about the representative bodies for purchase of fixed assets when occurring renovation. Under the old regulations: Fixed assets can be depreciated over the shortest stage with no residual value, the average apportioned funds on behalf of the institutional converse for income tax; renovation expenses, according to the 5-year average apportioned funds on behalf of institutional are translated into revenue while calculating the preferential tax. Without doubt, before 1 January 2010, the expenditure occurred which have been calculated under the GSF  No. 63 method to calculate the tax, it should be continued until the expiry.
- 2) It shall not be offset against income expenditures ;
- 3) For entertainment expenses, the exact amount should be the actual amount incurred.
- 4) For the country’s public welfare in monetary form and relief donations; late penalties, fines, and for its head office advance, all these do not belong to its own costs incurred in business activities and it should not be charged in the amount for expenditure. Under the New approach,  No. 63 it further clarify that: representative bodies to pay late fees and penalties may charge as expenditures for operating revenues.
- 5) Representative bodies on behalf of the had office pay certain items in advance which are outside its own business activities, do not belong to the costs incurred, as it is not a representative body of funds for translation of income tax expense.
"State Administration of Taxation on Representative Offices of Foreign Enterprises provide advance for its head office are part of the cost and it may be treated as fee income conversion” Notice (Guo Shui Wai Zi No. 88 , No. 333 ) are clearly defined in the text. Costs include:
- (1) Head agencies invite others to visit and the representative office advance the ticket costs;
- (2) To visit the head office organization, advance make by the representative office in China, i.e. the delegation staff’s accommodation costs, transportation costs together with any other socialize costs, but exclude those from China which engage in business negotiations, contracts, etc.
- (3) The head office launches a large-scale exhibition in China, advance made by the representative bodies, the agency costs related, the sample tariffs, domestic transport, transportation costs and other related expenses.
6. Other costs include:-
- 1. The consideration for purchasing goods in China and its transportation costs paid on behalf of its head office;
- 2. For goods shipped to China and charged in the territory, the warehousing costs, customs fees;
- 3. Costs of interpreter of staff from head quarter while visiting China;
- 4. The head office success in a project bidding in China, the representative body arrange payment for the said tender, fees and so on.