v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
17.
INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Group is not subject to tax on income or capital gains. Additionally, upon payment of dividends
by
the Group to its shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
Subsidiaries in Hong Kong are subject to Hong Kong Profits Tax rate at 16.5%, and foreign-derived income is exempted from income tax. There are no withholding taxes upon payment of dividends by the subsidiaries incorporated in Hong Kong to its shareholders.
Chinese mainland
Under the PRC Enterprise Income Tax (“EIT”) Law, which has been effective since January 1, 2008, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are subject to a unified 25% enterprise income tax rate, except for certain entities that are entitled to preferential tax treatments. Preferential EIT rates at 15% is available for qualified “High and New Technology Enterprises” (“HNTEs”). The HNTE certificate is effective
for a period of three years. Further, preferential EIT rates are available for qualified Software Enterprises whereby entities are entitled to full exemption from EIT for two years beginning from their first profitable calendar year and a 50% reduction for the subsequent three calendar years.
Certain PRC subsidiaries and VIEs, including Baidu Online, Baidu China, Baidu International and Baidu Netcom, etc. are qualified HNTEs and enjoy a reduced tax rate of 15
% for the years presented, which will expire from 2026 to 2028. An entity could
re-apply
for the HNTE certificate when the prior certificate expires. Historically, all of the Company’s subsidiaries and VIEs have successfully renewed their certificates when the prior ones expired. Certain subsidiaries enjoyed a reduced tax rate as qualified Software Enterprise for the years presented, which will expire from 2026 to 2028.
Under the current EIT Law, dividends for earnings derived from January 1, 2008 and onwards paid by PRC entities to any of their foreign
non-resident
enterprise investors are subject to a 10% withholding tax. A lower tax rate will be applied if tax treaty or arrangement benefits are available. Under the tax arrangement between the PRC and Hong Kong, the reduced withholding tax rate for dividends paid by PRC entities is 5% provided the Hong Kong investors meet the requirements as stipulated by relevant PRC tax regulations, such as the beneficiary owner test. Capital gains derived from the PRC are also subject to a 10% PRC withholding tax.
Income (loss) before income taxes consists of:
 
 
  
For the years ended December 31,
 
 
  
2023
 
  
2024
 
  
2025
 
  
2025
 
 
  
RMB
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
(In millions)
 
Chinese mainland
      28,449        24,970        2,618        374  
Non-Chinese mainland
      (3,251 )       3,652        4,098        586  
  
 
 
     
 
 
     
 
 
     
 
 
  
     25,198        28,622        6,716        960  
  
 
 
     
 
 
     
 
 
     
 
 
  
For
the year ended December 31, 2025, income tax benefit amounted to RMB
182 million (US$26
million) in Chinese mainland, and income tax expense amounted to RMB
1.4 billion (US$206
million) in jurisdictions outside Chinese mainland.
Income taxes consist of:
 
 
  
For the years ended December 31,
 
 
  
2023
 
  
2024
 
  
2025
 
  
2025
 
 
  
RMB
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
(In millions)
 
Current income tax
      3,812        3,407        2,530        362  
Adjustments of deferred tax assets due to change in tax rates
      111        (334 )       229        32  
Deferred income tax expense (benefit)
      (274 )       1,374        (1,500 )
 
      (214 )
 
  
 
 
     
 
 
     
 
 
     
 
 
  
     3,649        4,447        1,259        180  
  
 
 
     
 
 
     
 
 
     
 
 
  
 
BAIDU, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025
 
The reconciliation of the actual income taxes to the amount of tax computed by applying the aforementioned statutory income tax rate
to
pre-tax
income is as follows:
 
 
  
 For the years ended December 31, 
 
 
  
2023
 
 
2024
 
 
  
RMB
 
 
RMB
 
 
  
(In millions)
 
Expected taxation at PRC statutory tax rate
      6,299       7,156  
Effect of differing tax rates in different jurisdictions
      410       (153 ) 
Non-taxable income
      (456 )      (593 ) 
Non-deductible expenses
      1,928       814  
Research and development super-deduction
      (3,067 )      (3,048 ) 
Effect of PRC preferential tax rates and tax holiday
      (1,833 )      (1,760 ) 
Effect of tax rate changes on deferred taxes
      111       (334 ) 
Reversal of prior year’s income taxes
      (156 )      (23 ) 
PRC withholding tax
      574       1,762  
Change in valuation allowance
      (161 )      626  
  
 
 
    
 
 
  
Taxation for the year
      3,649       4,447  
  
 
 
    
 
 
  
Effective tax rate
      14.5 %      15.5 % 
  
 
 
    
 
 
  
 
  
For the year ended December 31,
 
 
  
2025
 
 
  
RMB
 
 
US$
 
 
Percent
 
 
  
(In millions)
 
 
 
 
Income tax expense at PRC statutory rate
     1,679        240        25.0 % 
Foreign Tax Effects
         
Cayman Islands
         
Statutory tax rate difference between PRC and other jurisdictions
      678        97        10.1 % 
Hong Kong
         
Statutory tax rate difference between PRC and other jurisdictions
      (654 )      (94 )      (9.7 %) 
Non-taxable income
      (1,655 )      (237 )      (24.6 %) 
Non-deductible expenses
      361        52        5.4 % 
Others
      25        4        0.4 % 
Other foreign jurisdictions
      (12 )
 
      (2 )
 
      (0.2 %) 
Effect of changes in tax laws or rates enacted in the current year
      —         —         0 % 
Effect of cross-border tax laws
      —        —        0 % 
Change in valuation allowance
      810        116        12.1 % 
Nontaxable or nondeductible items
                         
Non-taxable income
      (69 )      (10 )      (1.0 %) 
Non-deductible expenses
      876        125        13.0 % 
Expected credit losses
      228        33        3.4 % 
Share-based compensation expenses
      351        50        5.2 % 
Others
      297        42        4.4 % 
Changes in unrecognized tax benefits
      (256
) 		      (37
) 		      (3.8 %) 
Other adjustments
                         
Effect of tax holidays inside PRC
      406        58        6.0 % 
Tax incentives relating to R&D expenditures
      (2,727 )      (390 )      (40.6 %) 
Effect of tax rate change on deferred tax
      229        33        3.4 % 
PRC withholding tax
      1,503       215       22.4 % 
Others
      65       10       0.8 % 
Income tax expense
    
1,259
      
180
      
18.7
%
 
 
The tax effects of temporary differences that gave rise to the deferred tax balances at December 31, 2024 and 2025 are as follows:
 
 
  
As of December 31,
 
 
  
2024
 
 
2025
 
 
2025
 
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
(In millions)
 
Deferred tax assets:
  
 
 
Allowance for credit losses
      905       1,412        202  
Accrued expenses, payroll and others, and impairment of long-lived assets
      4,067       6,705        959  
Fixed assets depreciation and intangible assets amortization
      3,511       3,121        446  
Operating lease liabilities
      1,255       1,159        166  
Net operating loss carry – forwards
      4,483       5,436        777  
Less: valuation allowance
      (10,498 )      (11,841 )
 
      (1,693 )
 
  
 
 
    
 
 
     
 
 
  
Total
      3,723       5,992        857  
  
 
 
    
 
 
     
 
 
  
 
 
  
As of December 31,
 
 
  
2024
 
  
2025
 
  
2025
 
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
(In millions)
 
Deferred tax liabilities:
  
Operating lease right-of-use asset
      1,255        1,159        166  
Withholding tax on PRC subsidiaries’ undistributed earnings
      2,966        3,730        533  
Tax on capital gains
      779        1,005        144  
Others
      400        501        72  
  
 
 
     
 
 
     
 
 
  
Total
       5,400         6,395         915  
  
 
 
     
 
 
     
 
 
  
As of December 31, 2025, the Group had tax losses of approximately RMB29.9 billion (US$4.3 billion) derived mainly from entities in the PRC and Hong Kong. The tax losses in the PRC can be carried forward for five years to offset future taxable profit, and the period is currently extended to 10 years for entities qualified as HNTE. The tax losses of entities in the PRC will expire from 2026 to 2035, if not utilized. The tax losses in Hong Kong can be carried forward with no expiration date.
As of December 31, 2025, dividend distribution withholding tax for the potential remittance of earnings from the PRC subsidiaries to offshore entities was RMB3.7 billion (US$533
million). The Group believes that the underlying dividends will be distributed in the future for offshore use, such as merger and acquisition activities. The Group did not provide for additional deferred income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries during the years presented on the basis of its current intent to permanently reinvest its foreign subsidiaries’ earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.
As of December 31, 2024 and 2025, the Group has unrecognized tax benefits of RMB670 million and RMB513 million (US$73 million), respectively, primarily related to the
tax-deduction
of accrued expenses which were presented in “Other
non-current
liabilities” in the consolidated balance sheets, if ultimately recognized would impact the annual effective tax rate.