The role of enterprise income tax: (1) Promote enterprises to improve business management activities and enhance the profitability of enterprises. (2) Regulate industrial structure and promote economic development. (3) To raise financial resources for national construction.
Section I? Taxpayers. Objects of taxation and tax rates
First, the taxpayer
(a) resident enterprises
refers to enterprises established in China according to law, or established in accordance with the laws of a foreign country (region), but the actual management organization in China.
Including: state-owned enterprises. Collective enterprises, private enterprises, joint ventures, joint-stock enterprises, foreign-invested enterprises, foreign enterprises and other organizations of production, business income and other income.
(B) non-resident enterprises
is established in accordance with the laws of foreign countries (regions) and the actual management body is not in China, but set up institutions and premises in China, or not set up institutions and premises in China, but there are derived from the income of enterprises in China.
Including: 1. management institutions, business institutions, offices
2. factories, farms, natural resources extraction sites
3. places to provide labor services
4. places engaged in construction, installation, assembly, repair, exploration and other engineering work
5. other institutions and places engaged in production and business activities
Second, the object of taxation
Determination of the source of income:
1. Income from the sale of goods, according to the place of transaction activities.
2. Income from the provision of labor services, determined in accordance with the place where the labor service occurs
3. Income from the transfer of property. (1) Transfer of real estate - determined in accordance with the location of the real estate.
(2) Income from the transfer of movable property - determined in accordance with the location of the enterprise or organization or place where the movable property is transferred.
(3) Transfer of equity investment assets - determined in accordance with the location of the invested enterprise.
4. Dividends, bonuses and other equity investment income - determined in accordance with the location of the enterprise that distributes the income.
5. Interest income, rental income, royalty income, according to the burden. Determined by the location of the enterprise or organization or place where the income is paid, or the place of residence of the individual who bears the burden and pays the income.
Third, the tax rate
Basic tax rate : 25%?
Low tax rate : 20% but 10% is applied when tax is actually levied
Section II? Taxable Income
The Enterprise Income Tax Law stipulates that the taxable income is the total income of an enterprise in each taxable year, minus the non-taxable income, tax-exempted income, deductions, and allowed to make up for the losses of previous years.
First, the total income
Including income from the sale of goods, income from the provision of services, income from the transfer of property, dividends, bonuses and other equity investment income, interest income, rental income, royalty income, income from donations, and other income.
Monetary income: cash, deposits, accounts receivable, notes receivable, investments in bonds ready to be held to maturity, and forgiveness of debt
Non-monetary forms: fixed assets, biological assets, intangible assets, equity investments, inventories, investments in bonds not ready to be held to maturity, labor, and related interests. Determine the amount of income at fair value.
(a) general revenue recognition
1,Sales of goods revenue
2.Provision of labor income
3,Income from the transfer of property
Revenue from the transfer of equity interests in an enterprise shall be recognized when the transfer agreement comes into effect and the completion of the procedures for the change of equity interests to recognize the realization of revenue. The income from the transfer of equity, after deducting the costs incurred for the acquisition of such equity, is the income from the transfer of equity.? When calculating the income from the transfer of equity, the enterprise shall not deduct the amount of the investee enterprise's undistributed profits and other retained earnings of the shareholders that may be allocated on the basis of that equity.
The amount of the remaining assets distributed to the shareholders of the liquidated enterprise, which is equal to the portion of the accumulated undistributed profits and accumulated surplus reserves of the liquidated enterprise calculated in proportion to the shareholdings held by such shareholders, shall be recognized as dividend income; and the portion of the balance of the remaining assets, less dividend income, which is in excess of or less than the cost of the shareholders' investment shall be recognized as the shareholders' income or loss from the transfer of investment.
When an investing enterprise withdraws or reduces its investment from an investee enterprise, the portion of the assets it acquires equal to the initial capital contribution shall be recognized as investment recovery; the portion equal to the investee enterprise's accumulated undistributed profits and accumulated surplus reserves calculated in proportion to the reduction of paid-in capital shall be recognized as dividend income; and the remaining portion shall be recognized as income from the transfer of investment assets.
4. Dividends, bonuses and other equity investment income, in accordance with the date of the investee to make a decision on profit distribution to recognize the realization of income.
5. Interest income, recognize the realization of income according to the date of the debtor's interest payable as determined by the contract.
6. Rental income, in accordance with the contract to determine the date of the lessee to pay rent to recognize the realization of revenue.
7. Royalty income, according to the contract to determine the date of the royalty payable by the licensee to recognize the realization of revenue.
8. Acceptance of donation income, according to the date of actual receipt of donated assets to recognize the realization of revenue.
9. other income, including enterprise assets surplus income, overdue packaging deposit income, really can not pay the payables, has been treated as bad debt loss and then recovered receivables, debt restructuring income, subsidy income, liquidated damages income, foreign exchange gains and so on.
(B) the recognition of special revenue
1. Sales of goods by installment payments, in accordance with the contractual agreement on the date of receipt to recognize the realization of revenue.
2. Enterprises entrusted with the processing of large machinery and equipment, ships, aircraft, as well as engaged in construction, installation, assembly engineering business or the provision of other labor services, etc., lasting more than 12 months, according to the progress of completion or completion of the workload during the tax year to recognize the realization of revenue.
3. If the revenue is obtained by means of product sharing, the realization of revenue is recognized according to the date when the enterprise shares the products, and the amount of revenue is determined according to the fair value of the products.
4. Enterprises incur non-monetary asset exchanges, as well as the goods. Property, labor for donation. Debt service. Sponsorship, fund-raising, advertising, samples. Employee benefits or profit distribution and other purposes, should be regarded as the sale of goods, transfer of property or the provision of services, but the State Council, the competent part of the State Council finance, taxation, except as otherwise provided.
5. Interest income from railroad bonds, half the corporate income tax.
6. Perpetual debt enterprise income tax treatment.
(1) the enterprise issued in accordance with the conditions of the perpetual debt, but also in accordance with the bond interest using enterprise income tax policy, that is, the issuer to pay the perpetual debt interest expenses are allowed to be deducted before its enterprise income tax, the investor to obtain the perpetual debt interest income should be taxed in accordance with the law.
(2) The perpetual debt referred to in item (1) above that meets the prescribed conditions refers to the perpetual debt that meets five (or more) of the following conditions:
The investee enterprise has a debt repayment obligation for the investment.
There is a clearly agreed interest rate and frequency of interest payment
There is a certain investment period
The investor does not have ownership of the net assets of the investee enterprise
The investor does not participate in the daily production and operation activities of the investee enterprise at night,
The investee enterprise can be redeemed, or it can be redeemed after the fulfillment of certain conditions.
The investee recognizes the investment as a liability.
The investment does not bear the same operating risks as the shareholders of the investee.
The investment is liquidated before the shares held by the investee's shareholders.
(3) When an enterprise issues perpetual bonds, it shall disclose the applicable tax treatment to the investor in the issuance documents in the issuance market such as the stock exchange and the interbank bond market.
(4) The tax treatment of each perpetual debt product by an enterprise issuing perpetual debt shall not be changed once it is determined. If the tax treatment adopted by the enterprise for the perpetual bonds is inconsistent with the accounting method, the issuer and the investor shall make corresponding tax adjustments in the tax treatment.
(3) Recognition of income from disposal of assets
(4) Enterprise income tax treatment of investment in non-monetary assets
(5) Income tax treatment of transfer of restricted shares of listed companies by an enterprise
(6) Enterprise income tax treatment of accepting assets transferred by the government and shareholders by an enterprise
(7) Confirmation of realization of relevant income
II. Non-taxable income and tax-exempt income
(1) Non-taxable income
1. Fiscal allocations
2. Administrative fees and governmental funds collected in accordance with the law and included in fiscal management.
3. Other non-taxable incomes stipulated by the State Council
4. Specific provisions on the enterprise income tax treatment of special-purpose financial funds.
(B) Tax-exempt income
1. Interest income from treasury bonds
2. Dividends, dividends and other equity earnings between eligible resident enterprises, which refers to the investment income obtained by resident enterprises directly investing with other resident enterprises.
3. Non-resident enterprises that have set up institutions and establishments in China obtain dividends, bonuses and other equity investment income from resident enterprises that are physically linked to the institutions and establishments. The income does not include investment income from holding resident enterprises' publicly issued and listed stocks for less than 12 months.
4. Income of qualified non-profit organizations
3. Principles and Scope of Pre-tax Deduction
(I) Principles of Deduction Items
1. Principle of Accrual System
2. Principle of Matching
3. Principle of Relevance
4. Principle of Certainty
5. Principle of Rationality
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(2) Scope of Deductions
1. Costs
2. Expenses
3. Taxes
4. Losses
5. Other Expenditures
(3) Deductions and Their Standards (Comprehensive)
When calculating taxable income, the following items may be deducted in accordance with the actual amount incurred or the specified Standard Deduction
1. Salary and Wage Income
(1) Reasonable salary and wage expenses incurred by the enterprise are allowed to be deducted according to the actual amount.
(2) Enterprises of state-owned nature, their wages and salaries shall not exceed the limited amount granted by the relevant government departments; the exceeding part shall not be included in the total amount of wages and salaries of the enterprise, and shall not be deducted in the calculation of the taxable income of the enterprise.
2. Employee welfare expenses, labor union expenses, employee education expenses
Deducted according to the standard, not exceeding the standard according to the actual number of deductions, more than the standard can only be deducted according to the standard.
(1) Employee welfare expenses, not more than 14% of the total wages and salaries are allowed to deduct.
(2) the enterprise allocated to the labor union funds, not more than wages. The part of the total wages and salaries of 2% are allowed to be deducted.
(3) the enterprise's expenditure on employee education expenses, not more than wages. The part of 8% of the total salary is allowed to be deducted when calculating the taxable income of the enterprise income tax; the part exceeding this amount is allowed to be carried forward and deducted in the next tax year.
Special circumstances: software manufacturing enterprises should accurately classify the employee training expenses in the employee education expenses, for those who can not be accurately classified, as well as accurately classified the balance of the employee education expenses after deducting the employee training expenses, are deducted in accordance with the ratio of 8% of the work and salary.
The training expenses incurred by nuclear power generation enterprises for training nuclear power plant manipulators. Enterprises should be nuclear power plant manipulator training costs and employees of the strict distinction between employee education expenses, separate accounting, employees actually incurred employee education expenses shall not be counted as nuclear power plant manipulator training costs directly deducted.
3. Social insurance premiums
The five insurance premiums paid for employees are allowed to be deducted
Supplementary pension insurance and supplementary medical insurance paid for are allowed to be deducted within the prescribed scope and standard.
The insurance premiums paid by enterprises in accordance with the regulations are allowed to be deducted. Commercial insurance premiums paid by enterprises for investors or employees are not deductible.
4. Interest expenses
Interest expenses on loans from non-financial enterprises to financial enterprises can be deducted
Interest expenses on loans from non-financial enterprises to non-financial enterprises can be deducted if they do not exceed the amount calculated according to the interest rate of the same kind of loans in the same period of time of the financial enterprises, and the excess part is not allowed to be deducted.
Deduction of interest expenses of related enterprises. Interest expenses incurred by an enterprise that receives from its related parties a ratio of creditor investment to equity investment exceeding the prescribed standard shall not be deducted in the calculation of taxable income.
5. Borrowing Costs
6. Exchange Losses
7. Business Entertainment Expenses
Deducted at 60% of the amount incurred, but up to a maximum of five-thousandths of the current year's sales (operating income) revenue.
8. Advertising and business promotion expenses
Qualified, not more than 15% of the current year's sales (operating) income is allowed to be deducted; more than the portion of the deduction is allowed to be carried forward to future tax years.
From January 1, 2021 to December 31, 2025, the expenditure on advertising and business promotion fees incurred by enterprises in the manufacture or sale of cosmetics, pharmaceutical manufacturing and beverage manufacturing (excluding alcohol manufacturing) shall be allowed to be deducted for a portion not exceeding 30% of the current year's sales (operating) revenue; any portion exceeding such portion shall be allowed to be carried forward for deduction in subsequent tax years.
Enterprises in the preparatory period, the advertising and business promotion costs incurred, can be included in the actual amount incurred in the enterprise preparatory costs, and in accordance with the above provisions in the pre-tax deduction.
Tobacco advertising and business entertainment expenses of tobacco enterprises can be included in the actual amount incurred in the preparation costs of the enterprise, and deducted before tax in accordance with the above provisions.
9. Special funds for environmental protection,
Deductions are allowed
10. Insurance premiums
Enterprises participating in property insurance, in accordance with the provisions of the insurance premiums paid, deductions are allowed.
11. Leasing fees
12. Labor protection fees
Reasonable labor protection expenditures are allowed to be deducted
13. Public welfare donation expenditures
The portion of the expenditure that does not exceed 12% of the total annual profit is allowed to be deducted, and the portion that exceeds 12% of the total annual profit is allowed to be carried forward and deducted in the subsequent three years in the calculation of taxable income. The deduction is allowed to be carried forward for the next 3 years when calculating taxable income.
14. Expenses related to assets
Expenses incurred by enterprises in transferring various types of fixed
assets are allowed to be deducted. Depreciation of fixed assets, amortization of intangible assets and long-term amortization costs calculated in accordance with the provisions of the enterprise are allowed to be deducted
15. Expenses shared by the head office
16. Loss of assets
17. Other items allowed to be deducted in accordance with the relevant laws, administrative regulations and the provisions of the relevant tax laws of the return home. Such as membership fees, reasonable conference fees, travel expenses, liquidated damages. Litigation costs, etc.
18.Fees and commissions expenditure Key to P189
Insurance enterprises, since January 1, 2019, incurred fees and commissions expenditure related to their business activities, not exceeding 18% of the balance of the year's total premium income after deducting surrenders, etc. (including this number), are allowed to be deducted when calculating the taxable income; more than that, allowed to be carried forward to subsequent The excess is allowed to be carried forward for deduction in subsequent years.
For other enterprises, the limit is calculated at 5% of the amount of revenue recognized in service agreements or contracts with intermediary service agencies or individuals with legal business qualifications (excluding both parties to the transaction and their employees, agents and representatives, etc.).
19. According to Article 21 of the Enterprise Income Tax Law, for the expenditures recognized by an enterprise based on the provisions of the financial accounting system and actually in the financial accounting treatment, where they do not exceed the scope and standard of pre-tax deduction stipulated in the Enterprise Income Tax Law and the relevant tax laws and regulations, the expenditures recognized by an enterprise in its actual accounting treatment may be deducted before the enterprise income tax, and the amount of its taxable income may be calculated
The taxable income of an enterprise can be deducted before the enterprise income tax according to its actual accounting treatment.
20. Enterprise maintenance fee expenditure
The actual expenditure of maintenance fee, belonging to the revenue expenditure, can be deducted as the current expense before tax; belonging to the capital expenditure, it should be included in the cost of the relevant assets, and according to the provisions of the "Enterprise Income Tax Law" depreciation or amortization of expenses deducted before tax.
Special circumstances: the maintenance fee of coal mining enterprises and the safety production cost of enterprises in high-risk industries, the maintenance fee advanced in accordance with the relevant provisions shall not be deducted before tax in the current period.
21. Enterprises involved in the government agreed to organize the shantytown renovation expenditures.
22. Policies related to pre-tax deduction of enterprise income tax for loan loss reserves of financial enterprises.
23. Tax treatment of convertible bonds converted into equity investment
(1) Tax treatment of the purchaser enterprise
The purchaser enterprise purchases convertible bonds and obtains interest income according to the agreed interest rate during the period of holding the bonds, and shall declare and pay the EIT in accordance with the law.
When the buyer converts the convertible bonds into shares, the outstanding interest receivable is converted into shares, the outstanding interest receivable is not recognized as income in time for accounting purposes, and should be declared as current interest income for tax purposes; the purchase price of the bonds, the outstanding interest receivable, and the relevant taxes paid for the cost of the investment in the shares after the conversion.
(2) The issuer's tax treatment
The interest on the convertible bonds incurred by the issuer's enterprise shall be deducted before tax in accordance with the fixed
If the issuer's enterprise converts the convertible bonds held by the purchaser and the unpaid interest payable to shares according to the agreement, the unpaid interest payable shall be regarded as paid and deducted before tax according to the regulations.
Fourth, not deductible items
1. Dividends paid to investors, dividends and other equity investment income payments.
2. Enterprise income tax
3. Late payment of tax, refers to taxpayers who violate tax laws and regulations, the tax authorities imposed late payment.
4. Fines, penalties and losses of confiscated finances, refers to the fines imposed by the relevant authorities, as well as the fines and confiscated properties imposed by the judicial authorities, when the taxpayer violates the provisions of the relevant state laws and regulations.
5. Donation expenditures exceeding the prescribed standards
6. Sponsorship expenditures refer to all kinds of non-advertising expenditures incurred by an enterprise that are not related to its production and business activities.
7. Unapproved reserve expenditure, refers to the State Council financial, tax authorities do not meet the various asset impairment provisions, risk provisions and other provisions for expenditure.
8. Management fees paid between enterprises, rents and royalties paid between business organizations within enterprises, and interest paid between business organizations within non-banking enterprises.
9. Other expenses not related to the acquisition of income.
V. Loss compensation
1. Loss, refers to the enterprise in accordance with the "Enterprise Income Tax Law" and its "Implementation Regulations", the total income of each tax year, less non-taxable income, tax-exempt income and the amount of deductions less than zero. The Tax Law provides that losses incurred by an enterprise in a tax year may be made up with the income of the following year, and if the income of the following year is not sufficient to make up for the losses, the losses may be continued to be made up year by year, but the maximum period shall not exceed five years. Moreover, when an enterprise pays enterprise income tax in aggregate, the losses of its overseas business organizations shall not be offset against the profits of its domestic business organizations.
2. Starting from January 1, 2018, enterprises with the qualification of high-tech enterprises or science and technology-based small and medium-sized enterprises (hereinafter collectively referred to as the qualification) in the current year, the losses incurred in the five years prior to the qualification year that have not yet been made up for are allowed to be carried forward to make up for the subsequent years, and the maximum carry-forward period is extended from five years to ten years.
3. The period of preparation of the enterprise is not counted as a loss year, the enterprise since the start of production and operation of the year, for the start of calculating the profit and loss of the enterprise year. Enterprises engaged in production and business activities before the preparatory activities incurred during the preparatory costs and expenses, shall not be calculated as a loss for the current period, the enterprise can be in the date of commencement of business operations in the year a one-time deduction, can also be in accordance with the provisions of the tax law relating to the treatment of long-term amortization of expenses processing, but once selected, shall not be changed.
4. For the tax authorities to check the tax situation of the enterprise in previous years, the taxable income increased, where the enterprise in previous years, and the loss of the enterprise income tax law allows to make up for the loss, should be allowed to increase the taxable income to make up for the loss. If there is still a balance after making up the loss, the enterprise income tax shall be calculated and paid in accordance with the provisions of the Enterprise Income Tax Law. The inspection of the increase in taxable income should be dealt with or penalized in accordance with the relevant provisions of the Tax Collection and Administration Law, depending on the circumstances.