For productive foreign-invested enterprises with an operating period of 10 years or more, they are exempted from enterprise income tax for the first and second years, and are subject to a 50% reduction in enterprise income tax for the third to fifth years, starting from the year in which they begin to make profits.
(1) Where a foreign-invested enterprise reorganizes or merges with other enterprises to become a joint-stock enterprise, and the original foreign-invested enterprise has been registered for cancellation by the administrative department for industry and commerce, and the newly-formed joint-stock enterprise meets all of the following conditions at the same time, it may be entitled to regular tax exemptions and reductions in accordance with Article 8 of the Income Tax Law of the Foreign-Invested Enterprises and Foreign Enterprises. tax treatment for the revaluation of its assets. Secondly, if the actual operating period of the original foreign-invested enterprise has not yet reached the operating period stipulated in the Tax Law for enjoying the relevant periodic tax reductions and exemptions, the original foreign-invested enterprise has paid the exempted or reduced enterprise income tax in accordance with the provisions of Article 8. A newly-formed joint-stock enterprise that does not fulfill the conditions of Eibu shall not be allowed to re-enjoy the regular tax reduction and exemption preferences provided for in Article 8. However, the newly formed joint-stock enterprises which have not yet begun or have not yet expired the regular tax exemptions and reductions that the original foreign-invested enterprises may enjoy in accordance with the provisions of the Tax Law may continue to enjoy the aforesaid tax incentives until the expiration of the said tax incentives and reductions.
(2) A joint-stock enterprise established by a foreign-invested enterprise or a foreign investor as a shareholder shall be entitled to regular enterprise income tax reductions and exemptions in accordance with the provisions of Article 8.
21. In accordance with the provisions of the Income Tax Law of Foreign Invested Enterprises and Foreign Enterprises, what are the two preferential treatments for reinvestment tax rebate according to the mode of investment?
Reinvestment tax rebate is a preferential measure for foreign investors to reinvest their profits from the enterprise in enterprises in China.
There are two preferential treatments for reinvestment tax rebate. Specifically:
One is that foreign investors in foreign-invested enterprises, the profits obtained from the enterprise will be directly reinvested in the enterprise to increase the registered capital, or as a capital investment in the opening of other foreign-invested enterprises, the operating period of not less than five years, upon application by the investor, approved by the tax authorities, the reinvestment part of the 40% of the paid income tax tax tax refunded.
The second is that foreign investors in China directly reinvested in the organization, the expansion of product export enterprises or advanced technology enterprises, as well as foreign investors will be directly reinvested from the profits of enterprises in the Hainan Special Economic Zone in the Hainan Special Economic Zone in the current infrastructure projects and agricultural development enterprises, the operating period of not less than five years, approved by the tax authorities, the reinvestment of part of the refund has been paid in the enterprise Income tax.
The so-called "operating period" refers to the foreign investor from the date of reinvestment of funds actually invested. For a new enterprise opened by reinvestment, it is calculated from the date when the new enterprise starts production and operation (including trial production and trial operation).
22. In the Income Tax Law for Foreign Invested Enterprises (FIEs) and Foreign Enterprises (FEs), how is the amount of reinvestment tax refund calculated?
The additional burden of tax refund due to reinvestment = reinvestment amount ÷ (l - the sum of the original actual applicable enterprise income tax rate and local income tax rate) × original actual applicable enterprise income tax rate × tax refund rate
There are a few points to be explained here:
(1) In the formula, "the original actual applicable tax rate "refers to the share of after-tax profits in the year the actual tax rate is calculated by how much tax payment, if the year also enjoy tax breaks, then the actual application of the tax rate should also include the prescribed proportion of tax reduction factors, in order to truly reflect the reinvestment of the amount of the year the actual amount of tax paid.
(2) The tax rebate rate refers to 40% or 100% applied in accordance with the provisions of (i) and (ii) above, respectively.
Investment companies which are 100% owned by foreign investors and which are specialized in investment business, and which reinvest the profit margins (dividends) of the profits distributed from the foreign-invested enterprises directly in China, can be regarded as foreign investors and enjoy the reinvestment tax rebate privileges.
Example: A Sino-foreign joint venture chemical enterprise in the mainland, the equity ratio of the Chinese and foreign parties is 6:4. 1996 taxable income of the enterprise is 2 million yuan, the foreign investor of the foreign-invested enterprise will be distributed to the profit after the income tax of 75% of the direct increase in the registered capital of the enterprise. Calculate the amount of income tax and reinvestment tax refund payable by the enterprise in 1997.
Solution:
(1) Enterprise income tax payable = 200 × 30% = 600,000 yuan)
(2) Local income tax payable = 200 × 3% = 60,000 yuan)
(3) Profit of the enterprise after income tax = 200 - 60 - 6 = 1.34 million yuan)
(4) Foreign investor's share of after-tax profit = 134 × 40% = 536 (million yuan)
(5) Increase in registered capital = 53.6 × 75% = 402 (million yuan)
(6) Reinvestment tax rebate = 40.2 ÷ (1-33%) × 30% × 40% = 72 (million yuan)
23.
23. How should the reinvestment tax rebate be managed according to the Income Tax Law of Foreign Invested Enterprises and Foreign Enterprises?
Direct reinvestment, as referred to in the tax law, means that a foreign investor in a foreign-invested enterprise directly uses the profit it has made from the enterprise to increase its registered capital before withdrawing it, or directly uses it to invest in organizing other foreign-invested enterprises after withdrawing it.
Where a foreign investor purchases shares (including allotment of shares) of its own enterprise or shares of other enterprises with the profits (dividends) obtained from a foreign-invested enterprise or a joint-stock enterprise, the preferential provisions of the Tax Law on reinvestment tax rebate do not apply.
(1) Procedures for Reinvestment Tax Refund
①When calculating the tax refund in accordance with the provisions of the Tax Law, the foreign investor shall provide a certificate confirming the year in which the reinvested profit belongs to; in case of inability to provide such a certificate, it shall be determined by the local tax authorities by using a reasonable method of deduction. The purpose of providing proof of the year to which the reinvested profit belongs is, firstly, to confirm whether the current year enjoys tax exemption or reduction in order to determine the actual applicable tax rate; and secondly, to confirm that the reinvested amount is indeed the foreign investor's share of the after-tax profit of the foreign-invested enterprise in which the foreign investor invested. There is no tax rebate for reinvestment of tax-exempt profits; there is also no tax rebate for reinvestment from other sources, such as borrowing income and settlement income.
②Foreign investors should be reinvested in the funds actually invested in the date of l years, with the amount of investment, investment period of the capital increase or proof of capital contribution to the original tax authorities to apply for a tax rebate.
3 foreign investors in accordance with the provisions of the preceding paragraph to apply for reinvestment tax rebates, should provide audit confirmation issued by the department to confirm the organization, the expansion of enterprises for product exports or advanced technology enterprises.
(2) Management of Reinvestment Tax Refund
①The foreign investor of a foreign-invested enterprise shall reinvest the profits obtained from the enterprise directly in the enterprise, or invest in the establishment of other foreign-invested enterprises, such as reinvestment of less than five years to withdraw, the refunded tax shall be paid back.
② foreign investors directly reinvested in the organization, the expansion of the enterprise, since the start of production, operation within three years from the date of reinvestment of funds invested in three years after the enterprise did not meet the standards of product export enterprises, or in the enterprise to start production, operation, or funds invested in three years after the enterprise failed to be withdrawn from the appraisal of the title of the advanced technology enterprises, should be paid back to the refund of 60% of the tax.
3) Foreign investors reinvesting in other places shall apply for tax refund to the tax authorities of the original place of taxation. The tax authorities of the original tax place shall send the "Foreign Investor Reinvestment Tax Refund Notice" to the tax authorities of the place where the reinvested enterprise is located at the same time when the tax refund is processed according to the above tax refund procedures. The tax authority of the location of the reinvested enterprise shall review and recognize the implementation of reinvestment in accordance with the above management regulations. If it is found that there is a reinvestment of the business period of less than five years after the withdrawal of the reinvestment, or reinvestment of new product export enterprises or advanced technology enterprises within the specified period of time does not meet the prescribed standards, the foreign investor shall, in accordance with the provisions of the regulations, to the tax authorities of the location of the enterprise accepting the reinvestment of the tax rebate shall be fully or partially paid back.