Two facts
Fact 1: The settlement funds for wastewater treatment services obtained by the Company from the Chongqing Municipal Bureau of Finance were treated as "non-taxable income" in accordance with the relevant provisions of the Ministry of Finance and the State Administration of Taxation's "Circular on the Issues of Handling of Enterprise Income Tax on Fiscal Funds for Specific Purposes" (Cai Shui [2011] No. 70). "
Facts
Fact 2: According to Cai Shui [2015] No. 78 issued by the Ministry of Finance and the State Administration of Taxation, "taxpayers who have enjoyed the policy of instant VAT refund provided for in this Circular, and have been penalized (except for a warning or a single fine of less than 10,000 yuan) for violating laws and regulations on taxation and environmental protection, shall not be entitled to enjoy the VAT refund policy provided for in this Circular, and shall be subjected to a penalty (except for a warning or a single fine of less than 10,000 yuan), for a period of 36 months starting from the next month following the date on which the decision on the penalty is issued. shall not be entitled to the value-added tax immediate refund policy provided for in this Circular" and other relevant provisions, the Company may have the condition of not meeting the relevant conditions of the value-added tax immediate refund policy of Cai Shui [2015] No. 78 and may not be able to fully enjoy the preferential policies on value-added tax.
A query
"As the Company has paid back the value-added tax on the sewage treatment income for the period from July 2015 to December 2016 in accordance with Cai Shui [2015] No. 78 this year, there is a possibility that the income from sewage treatment business obtained by the Company from the Municipal Treasury will no longer satisfy the provisions of Cai Shui [2011] No. 70, and therefore there is a possibility that it will be no longer be able to enjoy the income tax exemption policy, and it is possible that the Company may be required to pay back the corporate income tax on the sewage treatment business income for the period from July 2015 to December 2016."
Will the disqualification of the VAT incentives "implicate" the enterprise income tax? Because there is no more detailed information to support in-depth analysis, so from the content of the announcement can not determine the probability of the company to pay back the enterprise income tax size, but the announcement of information to give us the risk warning is also enough.
Three risks
Enterprises enjoying tax incentives for the comprehensive utilization of resources can't be capricious and have to keep a "clean slate", as a slight flaw may lead to the elimination of the preferential status, and can't be enjoyed again within 36 months.
Is the VAT refundable as non-taxable income for enterprise income tax? This is a controversial issue, and the mainstream opinion is that if it meets the condition of "non-taxable income" of EIT, it can be regarded as non-taxable income. So from this level, the two are not necessarily causal.
Nontaxable income may not necessarily bring "benefits". This is because the costs and depreciation associated with it are not deductible, and accounting may be more troublesome. In reality, there is also an option to forego non-taxable income.
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