2022-04-17Corporate income tax (1)

The Corporate Income Tax Law refers to the legal norms formulated by the state to adjust the rights and obligations between the collection and payment of corporate income tax.

The functions of corporate income tax: (1) Promote enterprises to improve their business management activities and enhance their profitability. (2) Adjust industrial structure and promote economic development. (3) Raise financial funds for national construction.

Section 1: Taxpayers. Taxation objects and tax rates

1. Taxpayers

(1) Resident enterprises

Refers to enterprises established in China in accordance with the law, or in accordance with the laws of foreign countries (regions) An enterprise that is legally established but whose actual management organization is in China.

Including: state-owned enterprises. Collective enterprises, private enterprises, joint ventures, joint-stock enterprises, foreign-invested enterprises, foreign enterprises and other organizations that derive income from production, operation and other income.

(2) Non-resident enterprises

Refer to enterprises established in accordance with the laws of foreign countries (regions) and with actual management institutions not located in China, but with institutions and places established in China, or in China. There are no institutions or places established in China, but there are enterprises with income derived from China.

Including: 1. Management agencies, business institutions, offices

2. Factories, farms, and places where natural resources are exploited

3. Places where labor services are provided

4. Places engaged in construction, installation, assembly, repair, exploration and other engineering operations

5. Other institutions and places engaged in production and business activities

2 , Taxable objects

Determination of sources of income:

1. Income from the sale of goods shall be determined according to the place where the transaction activities occur.

2. Income from the provision of labor services shall be determined according to the place where the labor services are performed.

3. Income from the transfer of property. (1) Real estate transfer - determined according to the location of the real estate.

(2) Income from the transfer of movable assets - determined according to the location of the enterprise or institution or place where the movable assets are transferred.

(3) Transfer of equity investment assets - determined based on the location of the invested enterprise.

4. Dividends, dividends and other equity investment income shall be determined according to the location of the enterprise where the income is distributed.

5. Interest income, rental income, and royalties income shall be borne according to the burden. The location of the enterprise, institution or site that paid the income shall be determined, or the domicile of the individual who bears or paid the income shall be determined.

3. Tax rate

Basic tax rate: 25%?

Low tax rate: 20%, but the 10% tax rate applies when the actual tax is levied

< p> Section 2? Taxable Income

The "Enterprise Income Tax Law" stipulates that taxable income is the total income of an enterprise in each tax year minus non-taxable income, tax-free income, and various deductions and the balance after losses from previous years are allowed to be made up.

1. Total income

Including income from sales of goods, income from provision of services, income from transfer of property, income from equity investments such as dividends and dividends, interest income, rental income, and royalties Income, income from donations, other income.

Monetary income: cash, deposits, accounts receivable, notes receivable, bond investments prepared to be held to maturity and debt exemptions, etc.

Non-monetary forms: fixed assets , biological assets, intangible assets, equity investments, inventories, bond investments not intended to be held until maturity, labor services and related rights and interests, etc. The amount of income is determined based on fair value.

(1) Recognition of general income

1. Income from the sale of goods

2. Income from the provision of labor services

3. Income from the transfer of property

The income from the transfer of equity by an enterprise shall be recognized when the transfer agreement takes effect and the equity change procedures are completed. The income from equity transfer is the income from equity transfer after deducting the cost incurred to acquire the equity. ? When calculating the income from equity transfer, the enterprise shall not deduct the amount that may be distributed based on the equity from the invested enterprise’s undistributed profits and other shareholders’ retained earnings.

The amount of residual assets distributed to the shareholders of the liquidated enterprise, which is equivalent to the portion of the liquidated enterprise’s accumulated undistributed profits and accumulated surplus reserves calculated based on the proportion of the shareholders’ shares, shall be recognized as Dividend income; the balance of the remaining assets after deducting dividend income, which exceeds or is lower than the shareholder's investment cost, should be recognized as the shareholder's investment transfer income or loss.

When an investing enterprise withdraws or reduces its investment from the invested enterprise, the part of the assets it acquires that is equivalent to the initial capital contribution should be recognized as investment recovery; it is equivalent to the accumulated undistributed profits and accumulated surplus reserves of the invested enterprise. The part calculated based on the proportion of reduced paid-in capital shall be recognized as dividend income; the remaining part shall be recognized as income from the transfer of investment assets.

4. Dividends, dividends and other equity investment income shall be recognized based on the date when the investee makes the profit distribution decision.

5. Interest income is recognized based on the date when the debtor pays interest as determined in the contract.

6. Rental income is recognized based on the date when the lessee pays rent determined in the contract.

7. Royalty income shall be recognized based on the date on which the royalties are payable by the franchisee as stipulated in the contract.

8. When receiving donation income, the realization of income shall be recognized based on the date of actual receipt of donated assets.

9. Other income includes corporate asset surplus income, deposit income from overdue packages, payables that cannot be repaid, accounts receivable that have been recovered after handling bad debt losses, debt restructuring income, subsidy income, liquidated damages income, Exchange gains, etc.

(2) Recognition of special income

1. If goods are sold by installment payment, the realization of income shall be recognized according to the payment date agreed in the contract.

2. If the enterprise is entrusted to process large-scale machinery and equipment, ships, aircraft, engage in construction, installation, assembly engineering business or provide other labor services, etc., and the duration exceeds 12 months, the completion progress or completion within the tax year shall be followed. The workload recognizes the realization of revenue.

3. If revenue is obtained through product sharing, the realization of revenue shall be recognized based on the date when the enterprise distributes the product, and the amount of revenue shall be determined based on the fair value of the product.

4. Enterprises exchange non-monetary assets and transfer goods. Property and services are donated. Debt repayment. Sponsorship, fundraising, advertising, samples. For purposes such as employee welfare or profit distribution, it shall be regarded as selling goods, transferring property, or providing services, unless otherwise provided by the financial and tax authorities of the State Council.

5. Interest income from railway bonds is subject to half the corporate income tax.

6. Corporate income tax treatment of perpetual bonds.

(1) Enterprises that issue perpetual bonds that meet the prescribed conditions can also use the corporate income tax policy according to the bond interest, that is, the interest payments on the perpetual bonds paid by the issuer are allowed to be deducted before their corporate income tax. Investment Interest income from perpetual bonds shall be taxed in accordance with the law.

(2) The perpetual bonds that meet the prescribed conditions as mentioned in the above item (1) refer to the perpetual bonds that meet more than five (inclusive) of the following conditions:

The invested enterprise has the obligation to repay the principal of the investment.

There is a clearly agreed interest rate and interest payment frequency

There is a certain investment period

The investor does not have ownership of the net assets of the invested enterprise

The investor does not participate in the daily production and operation activities of the invested enterprise.

The invested enterprise can redeem it, or it can redeem it after meeting certain conditions.

The invested enterprise includes the investment as liabilities.

This investment does not bear the same operating risks as the shareholders of the invested enterprise.

The order of settlement of this investment is before the shares held by the shareholders of the invested enterprise.

(3) When an enterprise issues perpetual bonds, its applicable tax treatment methods shall be disclosed to investors in the issuance documents of stock exchanges, bank and bond markets and other issuance markets.

(4) Once the tax treatment method of each perpetual bond product is determined by an enterprise that issues perpetual bonds, it shall not be changed. If the tax treatment method adopted by an enterprise for perpetual bonds is inconsistent with the accounting method, the issuer and investor must make corresponding tax adjustments when conducting tax treatment.

(3) Recognition of income from asset disposal

(4) Corporate income tax treatment of non-monetary asset investment

(5) Enterprise transfer of restricted shares of listed companies Relevant income tax treatment

(6) Corporate income tax treatment for enterprises that accept assets transferred from the government and shareholders

(7) Recognition of related income realization

2. No Taxable income and tax-exempt income

(1) Non-taxable income

1. Fiscal appropriation

2. Administrative properties collected in accordance with the law and included in financial management Fees, government funds.

3. Other non-taxable income stipulated by the State Council

4. Specific provisions on the treatment of corporate income tax on special-purpose fiscal funds.

(2) Tax-free income

1. Interest income from government bonds

2. Dividends, dividends and other equity income between qualified resident enterprises are Refers to the investment income obtained from direct investment by resident enterprises and other resident enterprises.

3. A non-resident enterprise that establishes an institution in China shall obtain dividends, dividends and other equity investment income from resident enterprises that are actually connected with the institution or place. This income does not include investment income obtained from holding publicly issued and listed stocks of resident enterprises for less than 12 consecutive months.

4. Income of qualified non-profit organizations

3. Principles and scope of pre-tax deductions

(1) Principles of deduction items

1. Accrual basis principle

2. Matching principle

3. Relevance principle

4. Certainty principle

5. Principle of rationality

(2) Scope of deduction items

1. Cost

2. Expenses

3 .Taxes

4. Losses

5. Other expenses

(3) Deduction items and their standards (comprehensive questions)

In When calculating taxable income, the following items can be deducted according to the actual amount or prescribed standards

1. Wage and salary income

(1) Reasonable wages and salaries incurred by the enterprise Expenditures are allowed to be deducted based on actual circumstances.

(2) For state-owned enterprises, their wages and salaries shall not exceed the limited amount given by the relevant government departments; the excess shall not be included in the total wages and salaries of the enterprise, nor shall it be used in calculating the tax payable by the enterprise Deducted from income.

2. Employee welfare expenses, trade union funds, and employee education funds

are deducted according to the standard. If the amount does not exceed the standard, the actual amount will be deducted. If the amount exceeds the standard, it can only be deducted according to the standard.

(1) Employee welfare expenses, which do not exceed 14% of total wages and salaries, are allowed to be deducted.

(2) The union funds allocated by the enterprise shall not exceed wages. A deduction of 2% of the total salary is allowed.

(3) The employee education expenses incurred by the enterprise shall not exceed wages. The 8% portion of the total salary is allowed to be deducted when calculating the corporate income tax; the excess is allowed to be carried forward for deduction in subsequent tax years.

Special circumstances: Software manufacturing enterprises should accurately divide employee training expenses in employee education funds. For those that cannot be accurately divided, and the balance of employee training expenses after accurate division of employee education funds, they shall be based on work , 8% of salary is deducted.

The training expenses incurred by nuclear power generation companies to train nuclear power plant operators. Enterprises should strictly distinguish nuclear power plant operator training expenses from employees’ employee education expenses and calculate them separately. Employees’ actual employee education expenses must not be included in the direct deduction of nuclear power plant operator training expenses.

3. Social insurance premiums

The five insurances and one housing fund paid for employees are allowed to be deducted

The supplementary pension insurance and supplementary medical insurance paid are allowed to be deducted in accordance with the regulations Deductions are allowed within the scope and standards.

Insurance premiums paid by enterprises in accordance with regulations are allowed to be deducted. Commercial insurance premiums paid by an enterprise for investors or employees shall not be deducted.

4. Interest expenses

Interest expenses incurred by non-financial enterprises on borrowings from financial enterprises can be deducted according to the actual situation

Interest expenses incurred by non-financial enterprises on borrowings from non-financial enterprises Expenditures that do not exceed the amount calculated based on the interest rate of similar loans of financial enterprises for the same period can be deducted according to the actual situation, and the excess amount is not allowed to be deducted.

Deduction of interest expenses of related enterprises. Interest expenses incurred when the ratio of debt investment to equity investment received by an enterprise from its related parties exceeds the prescribed standards shall not be deducted when calculating taxable income.

5. Borrowing costs

6. Exchange losses

7. Business entertainment expenses

Deducted at 60% of the amount incurred, but The maximum amount shall not exceed five thousandths of the current year's sales (operating income) revenue.

8. Advertising expenses and business promotion expenses

If the conditions are met, the portion not exceeding 15% of the sales (business) income of the year will be allowed to be deducted; the excess portion will be allowed to be carried forward for future tax payment Annual deductions.

From January 1, 2021 to December 31, 2025, advertising expenses and business promotions incurred by companies manufacturing or selling cosmetics, pharmaceutical manufacturing, and beverage manufacturing (excluding alcohol manufacturing) Expenditure expenditures that do not exceed 30% of the current year's sales (business) income are allowed to be deducted; the excess is allowed to be carried forward for deduction in subsequent tax years.

During the preparation period of the enterprise, the advertising expenses and business promotion expenses incurred can be included in the enterprise preparation expenses according to the actual amount incurred, and deducted before tax according to the above provisions.

Tobacco advertising expenses and business entertainment expenses of tobacco enterprises can be included in the enterprise preparation expenses according to the actual amount incurred, and can be deducted before tax according to the above provisions.

9. Special funds for environmental protection,

allowed to be deducted

10. Insurance premiums

The enterprise participates in property insurance and pays it in accordance with regulations Insurance premiums are allowed to be deducted.

11. Rental fees

12. Labor protection fees

Reasonable labor protection expenses are allowed to be deducted

13. Public welfare donations Expenses that do not exceed 12% of the annual total profit are allowed to be deducted, and those that exceed 12% of the annual total profit are allowed to be carried forward and deducted when calculating taxable income within the next three years.

14. Expenses related to assets

Expenses incurred by an enterprise in transferring various fixed assets

are allowed to be deducted. The depreciation of fixed assets, intangible assets and amortization of long-term prepaid expenses calculated by the enterprise in accordance with regulations are allowed to be deducted

15. Expenses shared by the head office

16. Asset losses< /p>

17. Other items allowed to be deducted in accordance with relevant laws, administrative regulations and relevant tax laws. Such as membership fees, reasonable conference fees, travel expenses, liquidated damages. Litigation costs, etc.

18. Here comes the key point of handling fees and commission expenses P189

Insurance companies, starting from January 1, 2019, will not be charged for handling fees and commission expenses related to their business activities. The portion exceeding 18% (including the principal amount) of the total premium income for the year after deducting surrender charges, etc., is allowed to be deducted when calculating taxable income; the excess portion is allowed to be carried forward for deduction in subsequent years.

For other enterprises, 5% of the amount of revenue recognized in service agreements or contracts signed with intermediary service institutions or individuals with legal business qualifications (excluding both parties to the transaction and their employees, agents and representatives, etc.) Calculate limits.

19. According to the provisions of Article 21 of the "Enterprise Income Tax Law", the expenditures that have been recognized by the enterprise in accordance with the financial accounting system and actually in the financial accounting treatment do not exceed the "Enterprise Income Tax Law" If the scope and standard of pre-tax deductions are stipulated in relevant tax regulations, the expenditures recognized according to the actual accounting treatment of the enterprise can be deducted before corporate income tax to calculate the taxable income.

20. Enterprise maintenance expenses

If the actual maintenance expenses are income expenditures, they can be deducted as current expenses before tax; if they are capital expenditures, they should be It will be included in the cost of relevant assets, and depreciation or amortization expenses will be accrued and deducted before tax in accordance with the provisions of the Enterprise Income Tax Law.

Special circumstances: Maintenance fees for coal mining enterprises and production safety expenses for enterprises in high-risk industries. The maintenance fees accrued in accordance with relevant regulations shall not be deducted before tax in the current period.

21. Enterprises participate in shanty town reconstruction expenditures organized by the government with the consent of the government.

22. Policies related to the pre-tax deduction of corporate income tax for loan loss reserves of financial enterprises.

23. Regarding the tax treatment of convertible bonds converted into equity investments

(1) Tax treatment of the buyer's company

The buyer's company purchases convertible bonds , the interest income obtained at the agreed interest rate during the holding period shall be declared and paid corporate income tax in accordance with the law.

When the convertible bonds of the purchaser's enterprise are converted into stocks, if the uncollected interest receivable is also converted into stocks, the uncollected interest receivable will be recognized as income in timely accounting and should also be treated as current tax revenue. Interest income is declared and taxed; after conversion, the stock investment cost is based on the bond purchase price, receivable and uncollected interest and related taxes paid.

(2) Tax treatment of the issuer enterprise

The interest on the convertible bonds incurred by the issuer enterprise shall be deducted before tax at a fixed rate

The issuer enterprise If the convertible bonds held by the purchaser and the unpaid interest payable are converted into stocks as agreed, the interest payable and unpaid will be deemed to have been paid and will be deducted before tax in accordance with regulations.

4. Items not allowed to be deducted

1. Dividends, dividends and other equity investment income paid to investors.

2. Corporate income tax

3. Tax late payment fees refer to late payment fees imposed by tax authorities on taxpayers who violate tax regulations.

4. Fines, fines and confiscated financial losses refer to fines imposed by relevant departments on taxpayers who violate relevant national laws and regulations, as well as fines imposed by judicial organs and confiscated property.

5. Donation expenditures exceeding prescribed standards

6. Sponsorship expenditures refer to various non-advertising expenditures incurred by enterprises that have nothing to do with production and business activities.

7. Unapproved reserve expenditures refer to various asset impairment reserves, risk reserves and other reserve expenditures that are not in compliance with the State Council's finance and tax authorities.

8. Management fees paid between enterprises, rents and royalties paid between business institutions within enterprises, and interest paid between business institutions within non-bank enterprises.

9. Other expenses not related to obtaining income.

5. Loss compensation

1. Loss refers to the deduction of the total income of an enterprise in each tax year in accordance with the provisions of the Enterprise Income Tax Law and its Implementation Regulations Non-taxable income, tax-free income and amounts less than zero after various deductions. The tax law stipulates that losses incurred by an enterprise in a certain tax year can be made up with the income of the next year. If the income of the next year is not enough to make up, the losses can be continued year by year, but the longest period shall not exceed 5 years. Moreover, when an enterprise calculates and pays corporate income tax on a consolidated basis, the losses of its overseas business entities shall not be offset against the profits of its domestic business entities.

2. Starting from January 1, 2018, for enterprises that qualify as high-tech enterprises or technology-based small and medium-sized enterprises (hereinafter collectively referred to as qualifications) in the current year, the uncompensated losses incurred in the five years preceding the year of qualification must be fully compensated. Losses are allowed to be carried forward to be made up in subsequent years, and the maximum carryover period is extended from 5 years to 10 years.

3. The enterprise preparation period is not counted as a loss-making year. The year when the enterprise starts production and operation is the year when the enterprise's profits and losses begin to be calculated. Preparatory expenses incurred during the preparatory activities before the enterprise engages in production and operation shall not be calculated as losses for the current period. The enterprise may deduct it in one go in the year when it starts operations, or it may handle it in accordance with the provisions of the tax law on the treatment of long-term deferred expenses, but Once selected, it cannot be changed.

4. For the taxable income that is increased when the tax authorities inspect the enterprise's tax situation in previous years, if the enterprise incurred losses in previous years and the losses are allowed to be made up under the "Enterprise Income Tax Law", it should be The loss is allowed to be made up with the increased taxable income. If there is still a balance after making up for the loss, corporate income tax will be calculated and paid in accordance with the provisions of the Enterprise Income Tax Law. The taxable income increased upon inspection shall be dealt with or punished according to the circumstances and in accordance with the relevant provisions of the Tax Collection and Administration Law.