Provisions of the Enterprise Income Tax Law that Financial Leasing Institutions Should Follow
Introduction: How should financial leasing institutions follow the provisions of the Enterprise Income Tax Law? Here is some information, welcome to read and learn.
March 16, 2007, the Tenth National People's Congress of the Fifth Session adopted the "Chinese People's *** and State Enterprise Income Tax Law" (hereinafter referred to as? this Law?) and stipulates that the ? This Law shall come into force on January 1, 2008? and? The State Council formulates implementing regulations in accordance with this Law? This article is the author's study notes on this Law as a practitioner of financial leasing organization. Please correct me if I have made any mistakes.
In general, income tax has never been a sensitive subject for China's financial leasing institutions. It's just a matter of ? The difference between inside and outside is that there is a difference between inside and outside. Three exemptions and two reductions? while purely domestic-funded financial leasing organizations cannot enjoy such preferential treatment, that's all. In addition, like other industries, the income tax rate is 33%. And since January 1, 2008, even the aforementioned? Internal and external difference? are gone, changed to internal and external tax burden is equal. So what is there to learn? In my opinion, there is still something to learn. The following is my special attention in the study with the financial leasing organizations directly related to some of the content.
◆ China's existing financial leasing institutions, including the Ministry of Commerce (or its predecessor, the Ministry of Foreign Trade and Economic Cooperation) approved the establishment of the sino-foreign joint venture financial leasing company 12, the Ministry of Commerce approved the establishment of the Ministry of Commerce does not contain foreign capital component of the financial leasing company 20, as well as approved by the People's Bank of China set up by the China Banking Regulatory Commission supervised by the financial leasing company 12 (which is being reorganized, and some have been entered into bankruptcy and liquidation procedures), are all (some of which are in the process of reorganization and some of which have entered bankruptcy and liquidation proceedings), are all, without exception, enterprises. Therefore, these organizations are undoubtedly the taxpayers of income tax.
◆ China's existing financial leasing institutions, are in accordance with Chinese laws and regulations established in China. Therefore, they are all resident enterprises in China. Such enterprises should pay enterprise income tax on their income derived from within and outside China. In other words, all existing financial leasing organizations in China, whether they are only engaged in domestic business or also engaged in cross-border business, such as cross-border financial leasing, should pay enterprise income tax on their income.
◆ Like any resident enterprise in China, financial leasing institutions in China have the obligation of remittance. That is to say, these organizations in the tax year after the end of the specified period, should be in accordance with the tax laws, rules, regulations and other provisions relating to enterprise income tax, calculate their own annual taxable income (that is, the so-called ? income tax base?) The company will also calculate the annual taxable income (i.e., the so-called "income tax base") and the amount of income tax to be paid, determine the amount of tax to be paid or refunded for the year based on the amount of income tax paid in advance on a monthly or quarterly basis, fill in the annual EIT return, file the annual EIT return to the competent tax authorities, provide the relevant information requested by the tax authorities, and settle the EIT for the whole year.
◆ The taxable income of a financial leasing organization in China refers to the balance of all taxable income earned by a taxpayer during a certain period minus all expenses allowed to be deducted in the tax period in accordance with the provisions of the tax law, which is the tax basis for calculating the amount of enterprise income tax. The taxable income referred to in this law refers to the total income of an enterprise for each taxable year, less non-taxable income, tax-exempt income, various deductions, and the balance of losses allowed to be made up for previous years, as the taxable income, which is used as the basis for calculating the amount of enterprise income tax.
◆ Tax incentives refer to the state's use of tax policy in tax laws and administrative regulations to provide a specific taxpayers and tax objects to reduce or exempt the tax burden of a measure. The tax incentives for enterprise income tax provided for in this law include tax exemption, tax reduction, additional deduction, accelerated depreciation, reduction of income, and tax credits.
◆ All along, for China's financial leasing organizations, in terms of income tax policies and regulations, the more sensitive topics are two: First, the financial leasing method to obtain fixed assets (leased property) enterprises, whether to enjoy the benefits of accelerated depreciation of fixed assets. In this regard, first of all, we have the Circular on Promoting Technological Advancement of Enterprises on Financial and Taxation Issues (Cai Gong Zi [96] No. 41) issued on April 7, 1996, which states that "the promotion of technological advancement of enterprises should be based on the principle of promoting technological advancement of enterprises". Its 〖4. promote the renewal of enterprise machinery and equipment〗(3) stipulates that ? Enterprise technical transformation to take financial leasing method leased machinery and equipment, depreciation can be based on the shorter of the lease term and the state depreciation 'principle to determine, but the shortest depreciable life is not shorter than three years. However, its scope of application is limited. For, its Article 6 states that ? This notice applies to state-owned, collective industrial enterprises. May I ask, to this day, the lessee of financial leasing transactions, how many are still state-owned enterprises? Those with, for example, construction machinery, transportation, medical equipment or environmental protection equipment as the lessee of the lease, who is an industrial enterprise? Secondly, I personally believe that it is extremely inappropriate to decide whether or not to grant tax incentives not on the basis of the type of object of fixed asset investment, but on the basis of the mode of transaction (e.g., whether it is a credit or a financial lease). State Administration of Taxation 2003.10.13 issued "on the decentralization of the management of fixed assets accelerated depreciation of the approval of the project follow-up management notice" (Guo Shui Fa [2003] No. 113) of the contents of the provisions of the extremely desirable, Cai Gong Zi [96] No. 41 should be repealed at an early date; Secondly, where the enterprise to purchase the acquisition of equipment with self-financing can be based on the relevant rules and regulations, for example, in accordance with the "domestic equipment investment credit for technological transformation". Technological transformation of domestic equipment investment credit enterprise income tax examination and management methods" (State Taxation Development [2000] No. 13) of the provisions of the preferential treatment of tax credits, in the enterprise to financial leasing, can also enjoy such preferential treatment? So far, the State Administration of Taxation has not responded. In other words, there is no door.
◆ However, not any income of the enterprise is necessarily the tax base of its income tax. For example, in the case of income tax, there are? deductions from income? and? deductions? for example, there are the terms "imputed income" and "added deductions" for the purpose of income tax. Reduced income is a tax incentive that reduces taxable income from business activities by a certain percentage in accordance with the provisions of the tax law, thereby reducing the amount of taxable income. Deduction refers to a tax incentive measure that allows a certain percentage to be added to the actual amount incurred as a deduction in calculating taxable income in accordance with the tax law. For example, assuming that the tax law provides for 150% deduction of research and development costs, then if the enterprise develops a new product in the year the actual expenditure of research and development costs of 100 yuan, can be deducted at 150 yuan (100?150%) amount before tax to reflect the policy of encouraging research and development. Of course, these provisions have nothing to do with the financial leasing institutions engaged in the virtual economy that is not the real economy. In addition, there is the ? Non-taxable income? The term "non-taxable income" is used to refer to income that is not taxable by nature or source. It refers to the nature and root of the enterprise's profit-making activities do not belong to the economic benefits, not tax obligations and not as part of the taxable income income. Non-taxable income includes financial allocations, administrative fees and government funds collected and included in the financial management according to the law. Of course, these are all for-profit enterprises with China's financial leasing institutions, is not related to the wind and cows and horses. And with the financial leasing institutions directly related, will affect (reduce) its income tax base, is the so-called? Tax-exempt income? Tax-exempt income refers to the income that belongs to the taxable income of the enterprise but is exempted from enterprise income tax according to the tax law. One of the national debt interest income, is the income that can be directly offset, not included in the income tax base of China's financial leasing institutions.
◆ In addition, China's financial leasing institutions in the remittance of income tax, the basis may not be the financial statements of the profit before income tax. Why? Because here there is also a question of whether the expenses incurred are in accordance with the provisions of the tax law. For example, according to the Accounting System for Financial Enterprises, such enterprises, including financial leasing institutions, can independently make eight accruals. The more accruals (e.g. bad debt provision), the greater the expenses, which will naturally lead to a reduction of the income tax base. In this regard, the tax law, as a public law, while recognizing the right of enterprises to independently determine the level of accruals, insists that the determination of the tax base for income tax payable must be in accordance with the specific provisions of the tax law, and make a separate account. We call this? Taxable accounting? and call this behavior? General tax adjustments. That is, in accordance with the provisions of the tax law in the calculation of taxable income, if the enterprise's financial and accounting treatment is inconsistent with the provisions of the tax laws and administrative regulations, should be in accordance with the provisions of the tax laws and administrative regulations to calculate the tax tax adjustments, and accordingly re-adjusted to calculate the tax. Of course, in the administrative enforcement of the tax authorities, there is another kind of behavior, called ? Special tax adjustment? , which refers to the tax adjustments made by the tax authorities for the implementation of anti-avoidance purposes on specific tax matters of taxpayers, including tax adjustments made for the taxpayers' transfer pricing, capital weakening, tax havens and other tax avoidance situations.
Article 237 of the Contract Law provides that a financial lease contract is a contract law in which the lessor purchases the leased property from the seller based on the lessee's choice of the seller ﹑ the leased property, provides it to the lessee for use, and the lessee pays the rent.
Financial leasing contract on the lease has the following three forms:
A ﹑ surrender law. Commercial lease contract expires, the lessee agreed to the lease contract will be returned to the lessor, the lessor to deal with the leased property, because the leased property in the lease expiration have generally reached the use of the period, the lessor is difficult to rent or transfer after the recovery, so the leased property after the expiration of the period of time, is generally not used in this way law.
Second, the renewal method. Business in the lease contract period before the expiration of a reasonable period of time, the lessee should notify the lessor, the lease on the continuation of the lease for negotiation, to determine the renewal of the lease term ﹑ rent and other content in the expiration of the period of the financial leasing contract to sign a renewal of the lease contract law.
Third, the retention of the purchase method. The commercial lessee to pay the nominal price of goods to obtain the ownership of the leased property, the lessee to obtain the ownership of the leased property, fixed assets investment, this method of lessor, lessee are favorable, so, after the expiration of the period of the financial lease contract, the treatment of leased property is generally used in this way.
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