Income Tax = Taxable Income * Tax Rate (25% or 20%, 15%) Taxable Income = Gross Income - Non-Taxable Income - Tax-Exempt Income - Various Deductions - Losses of Prior Years.
Example Questions
A certain enterprise is a resident taxpayer with an income tax rate of 25%, and the relevant operating conditions of the enterprise in the year 2014 are as follows:
(1) The enterprise realizes 68 million yuan of income from the sale of products in the whole year, and obtains 1.2 million yuan of interest income from treasury bonds.
(2) The annual cost of product sales is 36.8 million yuan.
(3) The annual business taxes and surcharges of 1.299 million yuan, of which 810,000 yuan of consumption tax, 342,300 yuan of urban maintenance and construction tax, 146,700 yuan of consumption tax surcharges.
(4) Annual product sales expenses of 13 million yuan (of which 11.5 million yuan in advertising and promotion costs).
Expanded:
Enterprise Income Tax (EIT) is levied on income earned by taxpayers. It includes income from the sale of goods, income from the provision of labor services, income from the transfer of property, dividend and bonus income, interest income, rental income, royalty income, income from accepting donations and other income.
Resident enterprises shall pay enterprise income tax on their income derived from sources within and outside China.
In addition to costs, expenses and losses, the relevant provisions of the tax regulations specify a number of deductions that are subject to tax adjustments in accordance with the tax regulations.
The main items include the following:
1 Deduction of interest expenses. Taxpayers in the production and operation period, the interest expenses on borrowing from financial institutions, according to the actual number of deductions; interest expenses on borrowing from non-financial institutions, not higher than the amount calculated in accordance with the financial institutions of the same type, the same period of the loan interest rate within the amount of the deduction is allowed.
2 Taxable salary deduction.
The regulations stipulate that the enterprise reasonable wages, salaries to be deducted, which means the abolition of the implementation of many years of domestic enterprises taxable salary system, effectively reducing the burden of domestic enterprises. However, the wages and salaries that are allowed to be deducted must be "reasonable", and those that are obviously unreasonable will not be deducted.
3 In the employee welfare, labor union funds and employee education expenses, the implementing regulations continue to maintain the previous deduction standards (withdrawal ratio of 14%, 2%, 2.5%), but will be "taxable gross wages" adjusted to "gross wages and salaries "The amount of the deduction has been increased accordingly.
In terms of employee education expenses, in order to encourage enterprises to strengthen the investment in employee education, the implementation of the regulations, in addition to the State Council competent departments in charge of finance and taxation otherwise provided, enterprises incurred expenditure on employee education expenses, not exceeding 2.5% of the total amount of wages and salaries are allowed to be deducted; more than the part of the deduction is allowed to be carried forward to the next tax year.
4 Donation deduction. Taxpayers of public welfare, relief donations, in the annual accounting profit of 12% or less, deductions are allowed. More than 12% of the part is not deductible.
5 Deduction of property, transportation insurance premiums. Property paid by the taxpayer. Transportation insurance premiums are allowed to be deducted in the tax calculation. However, the no-claim preference given to the taxpayer by the insurance company should be included in the taxable income of the enterprise.
6 Deduction of fixed asset leasing fees. Taxpayers leasing fixed assets in the form of operating leases can be directly deducted before tax; leasing fixed assets in the form of finance leases, the leasing fee shall not be directly deducted before tax, but the interest expenses in the leasing fee. The handling fee can be directly deducted at the time of payment.
7 Deduction of reserve for bad debts, reserve for doubtful debts and reserve for commodity price cutting. Taxpayers to withdraw the bad debt reserve, allowance for doubtful debts, in the calculation of taxable income is allowed to deduct. The withdrawal standard is temporarily implemented according to the financial system. Taxpayers are allowed to deduct the reserve for commodity price cuts when calculating taxable income.
8 Deduction of expenditure on transfer of fixed assets. Taxpayers transfer fixed assets expenditure refers to the transfer, sale of fixed assets incurred in the clean-up costs and other expenditures. Taxpayers are allowed to deduct the expenditure on the transfer of fixed assets in tax calculation.
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