The reason why there are upward and downward adjustments in the EIT is because the accounting profit is inconsistent with the EIT taxable income. In order to calculate the EIT, you have to convert the accounting profit into EIT taxable income before you can multiply it by the applicable tax rate to calculate the EIT.
Simply put, this is because some items exceed the deduction standard stipulated in the tax law, while some items are exempt from EIT. The difference arises from the different bookkeeping methods of tax law and accounting. So it needs to be adjusted.
According to Article 54 of the Law of the People's Republic of China on Enterprise Income Tax (Decree No. 63 of the President of the People's Republic of China):
Enterprises shall, within fifteen days from the date of the end of a month or a quarter, submit to the tax authorities a tax return for prepayment of enterprise income tax and make prepayment of tax. Enterprises shall, within five months from the date of the end of the year, submit annual enterprise income tax returns to the tax authorities and make remittance to settle the tax payable and refundable. When submitting the enterprise income tax return, enterprises shall attach financial accounting reports and other relevant information in accordance with the regulations."
For example: the 2018 enterprise income tax remittance period is from January 1 to May 31, 2019.
Expanded information:
Latest Preferential Policies on Remittance of Taxes
01 Increase in the standard of one-time pre-tax deduction for fixed assets
Enterprises are allowed to deduct a one-time lump sum of equipment and apparatus newly purchased during the period from January 1, 2018 to December 31, 2020, with a unit value of not more than 5 million yuan, when calculating taxable income, and will no longer calculate depreciation over a period of years.
Policy basis? Cai Shui [2018] No. 54, Announcement of the State Administration of Taxation No. 46 of 2018
02The ratio of pre-tax deduction for employee education expenses is raised to 8%
Since January 1, 2018, the part of employee education expenses incurred by enterprises that does not exceed 8% of the total wages and salaries is allowed to be deducted when calculating the taxable income for enterprise income tax purposes; and the part that exceeds this amount is allowed to be deducted in the subsequent The excess is allowed to be carried forward for deduction in subsequent tax years.
Policy basis? Cai Shui [2018] No. 51
03 Entrusted overseas R&D expenses can be deducted
Since January 1, 2018, expenses incurred for entrusted overseas R&D activities are included in the entrusted overseas R&D expenses of the entrusted party at 80% of the actual amount of the expenses (but excluding R&D activities entrusted to an individual overseas). The portion of the commissioned overseas R&D expenses not exceeding two-thirds of the qualified R&D expenses within the country can be deducted before the enterprise income tax in accordance with the regulations.
Policy basis? Cai Shui [2018] No. 64
04Increase in the proportion of additional deduction for R&D expenses
The R&D expenses actually incurred by enterprises in carrying out R&D activities, which are not formed into intangible assets for current profit and loss, shall be deducted on the basis of actual deduction in accordance with the regulations, and then deducted in accordance with 75% of the actual amount incurred before tax during the period between January 1, 2018 and December 31, 2020 ; where intangible assets are formed, they shall be amortized before tax at 175% of the cost of the intangible assets during the above period.
Policy basis? Cai Shui [2018] No. 99
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