Trademark royalties are one of the royalties. Article 2 of the Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China defines the income obtained by an enterprise from providing the right to use patent rights, non-patented technologies, trademarks, copyrights and other franchises, and the realization of the income is confirmed according to the date when the concessionaire pays the royalties as agreed in the contract. Trademark right is a single legal right, also known as the exclusive right to use a trademark. It refers to the non-exclusive right that the owner of a legally registered trademark controls his registered trademark and prohibits others from infringing on it, including the exclusive right to use, benefit, dispose of, renew and prohibit others from infringing on his registered trademark. Article 49 of the Implementation Regulations stipulates that management fees paid between enterprises, rents and royalties paid between operating institutions within enterprises, and interest paid between operating institutions within non-bank enterprises shall not be deducted. However, the trademark royalties paid by subsidiaries using the trademarks of the parent company do not belong to the franchise royalties that cannot be deducted before tax as stipulated in this article. Since the parent company and its subsidiaries belong to different independent legal entities, there is a relationship between control and being controlled. The price of trademark use fees should be determined according to the principle of fair trade between independent enterprises and treated as normal expenses of enterprises for tax treatment. To sum up, the parent company should recognize the income of the trademark royalties paid by subsidiaries for using the trademarks of the parent company according to the principle of independent transactions between enterprises. As long as the trademark royalties paid by subsidiaries meet the regulations between affiliated enterprises, they can be included in the expenses and deducted before tax.