The tax-saving function of financial leasing
The use of financial leasing can obtain reasonable and legitimate tax saving effect. This is one of the most important advantages of the existence of financial leasing.
The lessor of financial leasing business can enjoy the same as the bank? Pay business tax and surcharges according to the difference? The lessor in the traditional leasing business is required to pay the full amount of business tax according to the rent.
Lessees using finance leases to purchase equipment, if accounting for finance leases, you can enjoy the preferential policies of accelerated depreciation, you can get the benefits of depreciation expense before income tax; if accounting for operating leases, you can deduct the full amount of the rent before the income tax, the same access to? Accelerated depreciation? The benefits of accelerated depreciation.
Note: financial leasing, also known as financial leasing, refers to the lessor according to the lessee's choice of supplier and the subject matter of the lease, the lessor to the supplier to purchase the subject matter of the lease, and then rented to the lessee to use.
Lessee: also known as ? The lessee. In the lease contract, enjoy the right to use the leased property, and pay rent to the other party as agreed.
The main features of financial leasing
The main features of financial leasing are: as the ownership of the leased object is only a form of ownership taken by the lessor in order to control the risk of the lessee's repayment of rent, at the end of the contract is ultimately likely to be transferred to the lessee, the purchase of the leased object is chosen by the lessee, the maintenance of which is also the responsibility of the lessee, the lessor only provides financial services. The lessor only provides financial services. The principle of rent calculation is: the lessor takes the purchase price of the leased object as the basis, and calculates the rent according to the time the lessee occupies the lessor's funds, and calculates the rent according to the interest rate agreed by both parties. It is essentially dependent on the traditional leasing on the financial transactions, is a special financial instruments.
Specific features
The characteristics of financial leasing are generally summarized in five aspects.
First, the lease is decided by the lessee, the lessor to fund the purchase and lease to the lessee to use, and in the lease period can only be leased to a business use.
Second, the lessee is responsible for the inspection and acceptance of the leased goods provided by the manufacturer, the quality of the leased goods and technical conditions of the lessor does not guarantee the lessee.
Third, the lessor retains ownership of the leased property, the lessee pays rent during the lease and enjoys the right to use, and is responsible for the management, repair and maintenance of the leased property during the lease.
Fourth, once the lease contract is signed, during the lease, no party has the right to unilaterally withdraw from the contract. Only the destruction of the leased property or proved to have lost the value of the use of the case can suspend the execution of the contract, without reason to break the contract will have to pay a very heavy penalty.
Fifth, after the end of the lease period, the lessee generally have two options for the leasehold purchase and surrender, if you want to keep the purchase, the purchase price can be negotiated by the two parties to the lease.
The seven advantages of financial leasing
1, the decision to finance channels
In the history of China's leasing industry, leasing to solve the financing channels used to be the primary motivation of the lessee, and is still one of the main motives. 1980s and the early 1990s to obtain foreign exchange funds. 20 century 90s, after the mid-1990s, the performance to To solve the shortage of funds.
2, improve cash management
The leasing method will bring many benefits to the lessee's cash management. In finance leasing, the equipment can be paid in full, generally do not need prepayment. In an operating lease, because there is a residual value of the equipment, the actual payment made by the lessee is smaller than when the equipment is purchased in full. Because the lease return date is fixed, it is conducive to the lessee's capital plan.
3, in favor of equipment in the technological upgrading
Leasing is not only used to solve the lessee's financial channels, and widely used to avoid the risk of technological obsolescence of the lessee's equipment. To this end, the use of the leasing method is to make the lease term and the technical applicability of the equipment period; by the lessor to set the residual value of the equipment, the lessee pays only for its part of the financing. This method can be upgraded to the equipment; the equipment to the old for the new, to maintain technological leadership. The lessor can not only finance the purchase of new equipment, but also finance the acquisition of old equipment. At the end of the lease period, the lessee has three options for the equipment: return the equipment, lease renewal and retention of the purchase, so that in the choice of the technical standard of the equipment, there is a certain degree of flexibility. Even if the equipment is returned, the lessee saves the trouble and expense involved in disposing of the equipment.
4, can carry out off-balance sheet financing
Applicable to operating leases. In an operating lease, the leased asset is not included in the lessee's financial statements, and the rent paid by the lessee is only treated as current profit and loss. An operating lease is a form of off-balance sheet financing for the lessee. The benefits are:
1) Improvement of the lessee's corporate profits: at the beginning of the lease term, the cost of an operating lease is lower than the cost of a finance lease. Operating leases only incur rent, while finance leases are subject to depreciation by the lessee on the leased asset (generally used to pay back the lease), in addition to paying interest on the rent (interest follows principal).
2) Improve the return on assets: ROA (return on assets) = net profit / total assets. In the case of total assets and liabilities are not increased, the lessee through the lease to obtain the right to use the equipment, and the rent is recognized in the current profit and loss. Net income is improved and hence return on assets is improved.
3) Improved financial statement performance: In addition to return on assets, some other ratios in the lessee's financial statements can also be improved.
4) Avoid Stranded Assets: Equipment that is technologically outdated, unusable, and must be depreciated during its natural life is a stranded asset if it is disposed of at a loss to the enterprise. Through the leasing method (the contract contains upgrading provisions, refund provisions, renewal provisions, etc.) can avoid the emergence of stranded assets.
5, allowing accelerated depreciation
China's Ministry of Finance, the State Administration of Taxation in April 7, 1996 issued by the Ministry of Finance [1996] No. 41? On the promotion of technological progress of enterprises related to financial tax issues notice? The main content is: state-owned and collectively owned industrial enterprises in the technological transformation of the use of financial leases to add equipment, allowing accelerated depreciation. Depreciation period: according to the lease term and the international provisions of the principle of the shorter of the depreciation period, but the shortest shall not be shorter than 3 years.
6, flexible
Customers from the bank to obtain loans, the conditions are very strict. The use of leasing can bring a lot of flexibility and convenience to the lessee. The main flexibility is the flexibility of the lease. According to the use of equipment, accounting needs and income mode, there are a variety of flexible lease repayment, specifically by the parties to the lease according to the situation? Tailor-made?
2) Rent more then less (step-down): mostly based on income.
3)Rental vacation (rent holidays): the use of equipment has? vacation? The income from the equipment also has? vacation? For example, the equipment will be out of service for 3 months each year. Therefore, the rent should also be put 3 months of? The first time I saw this is when I was a little bit late for a vacation, and it was a little bit late.
4) skipped rent payments (skipped rent payments): for the lease of agricultural machinery, the source of rent is the farmer's cash income, and the farmer's income is seasonal. Therefore, the lease of agricultural machinery and farmers to use cash flow to match the rental method.
5) **** enjoy type (enjoy together): according to the lessee of a key business indicators of a certain percentage of the rent set, the business situation is good when more pay back, not good when less pay back.
7, convenient
Leasing business makes the lessee get a lot of convenience:
1) Financing and financing in one step.
2)Control of the manufacturer (lessor): especially in the case of manufacturer leasing. According to the contract, the equipment out of the problem and the manufacturer is not seriously solve the case, the lessee can refuse to pay rent.
3) avoid the lessee's disposal of equipment: in the leasing transaction, the lessor bears the burden, cost and risk of disposal of equipment, so that the lessee's burden is greatly reduced.
The basic information of financial leasing
Financial leasing (Financial Leasing), also known as equipment leasing (Equipment Leasing) or modern leasing (Modern Leasing), refers to leases that essentially transfer all or most of the risks and rewards associated with ownership of an asset. Ownership of the asset may or may not ultimately be transferred.
On August 26, 2015, the State Council hosted a State Council executive meeting to determine measures to accelerate the development of the financial leasing and financial leasing industry to better serve the real economy. The meeting pointed out that accelerating the development of financial leasing and financial leasing is an important initiative to deepen financial reform, which is conducive to alleviating the financing difficulties and financing is expensive, pulling the investment in corporate equipment and driving industrial upgrading. The meeting determined that, first, the practice of decentralization, the establishment of subsidiaries of financial leasing companies do not set a minimum registered capital restrictions. Ships, agricultural machinery, medical equipment, aircraft and other equipment financial leasing to simplify the relevant registration license or import and export procedures. In the qualification of the operation of the same treatment of leasing and self-purchase of equipment. Secondly, highlighting structural adjustment, accelerating the development of high-end core equipment imports, clean energy, social livelihood and other areas of leasing business, support the establishment of leasing companies for small and micro-enterprises, "three rural". Encourage leasing to promote equipment going out and international production capacity cooperation. Third, innovate the business model, make good use of "Internet+", insist on the combination of financing and financing, establish the circulation market of leased and second-hand equipment, and develop the sale-and-leaseback business. Fourth, increase policy support and encourage local governments to guide financial leasing and financial leasing to better serve the real economy through incentives, risk compensation and other means. Meanwhile, relevant departments should coordinate and strengthen risk management. Financial leasing is a new financial model, the risks borne by the financing company and the lessee are relatively low.
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