What are tax benefits?

Tax preferential treatment means that in order to cooperate with the country’s overall political, economic and social development goals in a certain period, the government uses the tax system to adopt corresponding incentives and care measures in taxation according to the intended purpose to alleviate the Tax obligations that certain taxpayers should fulfill to subsidize certain activities of the taxpayer or the corresponding taxpayers. It is one of the important means for the state to intervene in the economy.

Development background

In the past, people generally believed that taxation was just a tool for the government to obtain fiscal revenue. However, with the development of the economy and the deepening of theoretical research, people began to use tax expenditures to To manage and limit tax preferences, it is believed that tax preferences are expenditures carried out by the government through the tax system, so they are called tax expenditures. It is believed that tax expenditures and fiscal expenditures are both expenditures carried out by the government, but in different forms of expenditures. . Fiscal expenditures allocate funds directly to spending units, while tax-type expenditures do not levy taxes receivable by the state and give them to taxpayers in the form of tax benefits. The essence is the same, and it is even more timely than fiscal expenditures. Incorporate into budget management. At present, China's tax theory circle has begun to pay attention to tax expenditures and has formed a consensus that tax incentives, like fiscal expenditures, should be included in budget management as soon as possible and a catalog of tax expenditures in China should be compiled. In practice, although China strictly implements tax incentives in accordance with the provisions of tax laws and has cleaned up the terms of tax incentives, it has not compiled a catalog of tax expenditures in China.

Looking at China’s tax laws, tax incentives are mainly used to encourage the development of agriculture, forestry, animal husbandry, fishery, water conservancy and other industries, encourage the development of basic industries such as energy, transportation, post and telecommunications, and promote science and technology, education, culture , publicity, health, sports and other undertakings, reflect the country’s ethnic policies and support social welfare undertakings, encourage the development of the tertiary industry, encourage environmental protection and comprehensive utilization of natural resources, encourage commodity exports, attract foreign investment, and build special economic zones .

As early as the Qin State in the 4th century BC, China had adopted tax relief measures to encourage agricultural production. For example, those who work hard in farming and weaving to increase the production of millet and silk will be exempted from the burden of labor; in order to solve the problem of large numbers of people and small land in the country, which is not conducive to agricultural development, farmers from neighboring countries who voluntarily come to Qin will be exempted from the burden of labor in addition to providing land and houses. Three generations of corvee care. The forms of tax incentives adopted by modern countries mainly include tax reductions, exemptions, tax rebates, tax expenditures, investment credits, pre-tax loan repayments, accelerated depreciation, loss carry-forwards and tax deferrals.

Policy Brief Selection of Registration Place

China has formulated a series of preferential tax policies with different tax burdens in different regions. When investors choose the registration location of their enterprises, they can take advantage of the country's preferential tax policies for high-tech industrial development zones, poverty-stricken areas, bonded zones, and special economic zones to save a lot of tax expenditures. For example, China’s foreign-related tax preferential policies adopt a regional, focused, and multi-level approach. The specific contents include:

(1) A reduced tax rate of 15%, which includes:

p>

① Foreign-invested enterprises located in special economic zones, foreign enterprises that set up institutions and sites in special economic zones to engage in production and operation.

②Producing foreign-invested enterprises located in economic and technological development zones.

③Producing foreign-invested enterprises located in old urban areas of cities where coastal economic open zones, special economic zones, and economic and technological development zones are located are technology-intensive or knowledge-intensive projects, or the foreign investment amount is more than 30 million US dollars. The above are projects with long investment recovery time, or energy, transportation, and port construction projects.

④ Foreign-invested enterprises engaged in port and terminal construction.

⑤ Foreign-funded banks, Sino-foreign joint venture banks and other financial institutions established in special economic zones and other areas approved by the State Council, foreign investors invest capital or branches have operating capital of more than 10 million US dollars allocated by the head office, and the operating period is More than 10 years.

⑥Production-oriented foreign-invested enterprises established in Shanghai Pudong New Area, as well as foreign-invested enterprises engaged in energy and transportation construction projects such as airports, ports, railways, highways, and power stations.

⑦ Foreign-invested enterprises established in high-tech industrial development zones designated by the State Council and recognized as high-tech enterprises, and foreign-invested enterprises established in the Beijing New Technology Industrial Development Pilot Zone and recognized as new-tech enterprises investment enterprise.

⑧ Foreign-invested enterprises established in other areas specified by the State Council to engage in nationally encouraged projects.

(2) Scope of taxation

The tax rate is reduced at 24%. The scope includes: those located in coastal economic open zones, special economic zones, and cities where economic and technological development zones are located. A productive foreign-invested enterprise in the old urban area.

Organizational form of investment units

Generally speaking, in the early stages of a company's establishment, the possibility of losses is greater. The use of a branch can transfer the losses of the branch to the head office, thereby reducing the tax burden of the head office. When the invested enterprise enters regular operation, it can establish a subsidiary to enjoy the preferential tax policies provided by the local government.

Of course, we must also be wary of companies with abnormal flows. There are mainly four types of abnormal flow of enterprises:

(1) Shelling and separation type

This type of enterprise "builds in the east, registers in the west; lists in the south, and produces and sells in the north" . Some companies only register and put up a brand in a certain park or economic development zone, and the actual place of production and operation remains unchanged. Some register several or even dozens of companies at the same address.

(2) "Inverted type" of head office and branch office

Some companies have their original head office in a certain urban area. In order to enjoy preferential policies, they move the office and residence of the head office to an economic development zone. The establishment of a branch in the same place will result in the transfer of the subject's tax or the change of tax levels.

(3) "Total removal"

Due to the different preferential policies for enterprises in various districts, there has been a phenomenon of "enterprises will relocate wherever the policies are loose". Although the new registration place of this type of enterprise is consistent with the place of business, it is not relocated due to actual production and operation needs. It is purely to enjoy preferential policies to avoid paying taxes and pay less taxes and various funds. Some companies have finished enjoying the preferential policies here and moved to new locations to continue to enjoy the preferential policies.

(4) "Wandering unlicensed operations"

In order to break away from the territorial management of the industrial and commercial and taxation departments, a small number of enterprises engage in wandering and unlicensed operations under the pretext of changing their business premises.

Choice of investment direction

As society pays more and more attention to the development of an environmentally friendly economy, environmentally friendly industries and products will also enjoy preferential tax policies. Enterprises can use this opportunity to adjust their investment direction and achieve tax planning purposes. For example, Shenzhen City has stipulated the following preferential tax policies for high-tech industries:

(1) Corporate income tax concessions

① Two-year exemption for newly recognized productive high-tech enterprises Corporate income tax is levied, and corporate income tax is halved for 8 years. For existing high-tech enterprises, in addition to enjoying the original corporate income tax benefits of “two years of exemption and six years of halving” corporate income tax, a two-year halving of corporate income tax will be added. After the enterprise enjoys the preferential policy of reducing or exempting corporate income tax according to regulations, if the output value of its export products reaches more than 70% of the output value of that year's products, it will be levied corporate income tax at a rate of 10% after verification by the tax department.

② Recognized high-tech achievement transformation projects with independent intellectual property rights will be exempted from corporate income tax for five years; corporate income tax will be halved for the next three years.

③ After a new project introduced and absorbed by a high-tech enterprise is put into production, regardless of whether the enterprise has enjoyed income tax reduction or exemption in previous years, upon confirmation by the relevant departments of the municipal government and approval by the tax department, the project will be Profits are exempt from corporate income tax for three years.

④For enterprises engaged in the development of high-tech products from the transfer of self-developed technological achievements and the income from technical consulting, technical services and technical training incurred during the transfer of technological achievements, the annual net income shall be less than 500,000 yuan The portion above is exempted from corporate income tax, and the excess is subject to corporate income tax in accordance with the law; income from technology transfer, technical consulting, technical training, and technical services provided by scientific research units and colleges and universities with an annual net income of less than 1 million yuan is exempt from corporate income tax. , the excess amount will be levied at half the corporate income tax.

(2) Business tax reduction and exemption

① Recognized high-tech achievement transformation projects with independent intellectual property rights are exempt from business tax for 5 years; business tax is halved for the next 3 years.

② Business tax is exempted from the transfer of technological achievements by enterprises engaged in the development of high-tech products, scientific research units, and universities, as well as the income from technical consulting, technical services, and technical training incurred during the transfer process.

(3) Reduction and exemption of real estate tax, stamp duty and personal income tax

① Newly built or newly purchased production and business premises of high-tech enterprises and high-tech projects shall be self-built or purchased Real estate tax will be exempted for 5 years from the date of purchase.

② Technology contracts signed by high-tech enterprises and high-tech projects are exempt from stamp duty.

③ The shares rewarded and allocated to employees by high-tech enterprises and high-tech projects, and those shares that are reinvested in the production and operation of the enterprise are exempt from personal income tax.

In addition, according to the "Notice of the Ministry of Finance and the State Administration of Taxation on Value-Added Tax Policy Issues on the Comprehensive Utilization of Certain Resources and Other Products" (Caishuizi [2000] No. 198), starting from January 1, 2001 , implement the policy of immediate refund of value-added tax on the following goods;

① Shale oil and other products produced and processed using kerogen shale, a waste product associated with the coal mining process;

② Recycled asphalt concrete produced by mixing not less than 30% of waste asphalt concrete in the production raw materials; ③ Electricity produced by using municipal solid waste; ④ Not less than 30% of the production raw materials being mixed with Cement produced from coal gangue, stone coal, fly ash, bottom slag of coal-fired boilers (excluding blast furnace water slag) and other waste slag. At the same time, starting from January 1, 2001, the policy of halving the value-added tax payable has been implemented for the following goods: ① Electricity produced using coal gangue, coal slime, kerogen shale and wind power;

② Some new wall material products.

Application skills

Using preferential tax policies to obtain tax benefits in order to maximize after-tax profits is a common way for enterprises to implement tax planning. Due to the complicated terms of preferential tax policies and high application requirements, different preferential policies bring different expected tax benefits and planning costs, as well as their impact on total after-tax profits.

1. When applying multiple tax preferential policies, it is necessary to conduct comparative analysis and make a choice after a comprehensive balance.

The focus of planning tax preferential policies is to make a decision based on your own situation and current conditions. The provisions of preferential tax policies can be used to achieve tax savings or other tax planning purposes through reasonable selection and application.

When an enterprise applies multiple tax preferential policies at the same time and makes corresponding choices among them, it must conduct comparative analysis and comprehensive balance to maximize after-tax benefits or maximize the efficiency of specific tax targets. Make selections for criteria. Since a certain tax preferential policy is designed for a specific tax type, and enterprises generally need to pay multiple taxes at the same time, there is often a trade-off relationship between these taxes. Therefore, the evaluation of the tax benefits brought by a certain tax preferential policy is mainly reflected by indicators such as the total after-tax income generated after the implementation of the policy or the present value of the total after-tax income generated during the preferential period.

2. Fully consider the planning costs of tax preferential policies

The planning costs of tax preferential policies include direct costs and indirect costs. Direct costs mainly refer to the consumption of economic resources that occur due to changes in the current economic status of the enterprise in order to meet the requirements of a certain tax preferential policy. In addition, direct costs include actual expenses incurred in tax planning. Direct costs can generally be expressed in currency.

Indirect costs mainly refer to risk expenses caused by uncertain factors that may arise during the implementation of preferential tax policies. For example, the loss caused to the enterprise due to the sudden cancellation of the preferential policies being implemented due to changes in social and economic factors, or the change of the enterprise's business strategy or other unexpected factors during the implementation of the preferential tax policies. Meet or no longer fully meet the conditions for tax preferential policies, and are forced to be disqualified from enjoying preferential policies. The occurrence of indirect costs is generally uncertain. Therefore, it is difficult to measure it in currency during the planning process, but it should be fully considered when selecting a plan.

The use of preferential tax policies is feasible only when the tax benefits outweigh the planning costs. Tax benefits are generally determined based on the difference between the present value of net benefits brought about by preferential policies and the present value of planning costs.

3. Multinational taxpayers must pay attention to whether the government of the country of income source and the country of residence has signed a tax sparing agreement

Tax sparing refers to the tax benefits obtained by taxpayers in the country of income source. Tax is deemed to have been paid, and this portion is considered taxable income and is allowed to be deducted from taxable income when filing tax returns with the government of the country of residence.

The key to whether a multinational taxpayer can enjoy preferential tax treatment in the country of income source is to have such tax sparing treatment. The key lies in whether the government of the country of income source and the country of residence has signed a tax sparing agreement. If such an agreement is signed, Then the multinational taxpayer can finally obtain its tax benefits from the tax preferences enjoyed in the country of income source; if this agreement is not signed, the tax reductions and exemptions obtained in the country of income source must be reported to the government of the country of residence in accordance with the law. Pay this tax deduction. Therefore, before planning for preferential tax policies, multinational taxpayers must find out whether a tax sparing agreement has been signed between the country of residence and the country of source of income. If this agreement has not been signed, the general tax preferences of the country where the income comes from will not bring actual tax benefits to multinational taxpayers; if this agreement has been signed, the relevant provisions should be carefully read to understand the concessions. methods to better determine expected tax benefits.

Tax preferences in the “business tax to value-added” reform

Transitional arrangements for the current business tax preferential policies during the pilot period: 13 items including the transfer of copyrights by individuals and the provision of taxable services by individuals with disabilities Preferential policy of exemption from VAT; preferential policy of immediate VAT refund for pilot taxpayers registered in the Yangshan Bonded Port Zone who provide domestic freight, warehousing, loading and unloading and other services and enterprises that place disabled persons; qualified enterprises provide channels For transportation services and tangible movable property financial leasing services, if the actual tax burden of value-added tax exceeds 3%, a preferential policy of immediate refund of value-added tax will be implemented.

If part of the current business tax is reduced or reduced, it will continue to be exempted or refunded immediately after the value-added tax is levied. In order to maintain the continuity of the current preferential business tax policies, some of the current business tax exemption policies will continue to be exempted after the value-added tax is levied; in order to maintain the integrity of the value-added tax deduction chain, some of the current business tax exemption and exemption policies will be adjusted to value-added tax. The policy of refunding taxes as soon as they are levied; providing appropriate tax incentives to some industries where the tax burden has increased significantly.

Exports of service trade are subject to a zero-rate or tax-free system. Service trade exports are conducive to optimizing the investment, consumption and export structure and promoting the healthy and coordinated development of the national economy. The pilot program for replacing business tax with value-added tax stipulates that a zero-rate or tax-free system should be implemented for service trade exports.

In addition to the above tax incentives, in order to cooperate with this reform, relevant departments have also issued some special regulations, which also require relevant taxpayers to be familiar with and master.

Taxpayers providing taxable services to which different tax rates or levy rates are applicable shall separately calculate the sales to which different tax rates or levy rates apply; if they are not calculated separately, the higher tax rate shall apply.

If a taxpayer concurrently engages in business taxable items, the sales volume of taxable services and the turnover of business taxable items shall be separately accounted for; if there is no separate accounting, the sales of taxable services shall be determined by the competent tax authority. Forehead.

If a taxpayer is engaged in both tax-free and tax-reduced items, the sales of tax-free and tax-reduced items shall be calculated separately; if they are not calculated separately, no tax exemption or tax reduction shall be allowed.

After taxpayers provide taxable services and issue special VAT invoices, if the taxable services are suspended, discounted, or invoices are incorrectly provided, a special red-letter VAT invoice shall be issued in accordance with the regulations of the State Administration of Taxation. If a special red-letter value-added tax invoice is not issued in accordance with regulations, the output tax or sales amount shall not be deducted in accordance with regulations.

In order to help small businesses pay taxes and become more familiar with the accounting operations of special subsidies issued by the government, whether the directly reduced taxes should be included in non-operating income, tax issues on national debt interest income and transfer income, and other tax benefits To implement policies and avoid unnecessary tax-related risks, Changjietong Accounting Home held a series of expert video lectures on tax incentives. In the lecture column, finance and taxation experts explain current policies to taxpayers.