The Detailed Rules for the Implementation of the Provisional Regulations on Enterprise Income Tax stipulates that "taxable income = total income-allowable deduction of project amount". At present, State Taxation Administration of The People's Republic of China has promulgated the Measures for Pre-tax Deduction of Enterprise Income Tax in 2000, which clearly stipulates the principles and practices of deduction items, but the theoretical norms of income, an important concept of income tax, are still blank. The Provisional Regulations on Enterprise Income Tax only divides income into seven categories. Article 53 only stipulates that income tax needs to be confirmed on the accrual basis, but it does not make a clear definition of income tax. So, how should we know and solve this problem?

I. Recognition of "Income" in the Income Tax Law The Accounting System for Business Enterprises stipulates that income from the sale of goods shall be recognized when the following conditions are met:

The enterprise has transferred the main risks and rewards of commodity ownership to the buyer;

Enterprises neither retain the right to continue management, which is usually associated with ownership, nor control the goods that have been sold;

The economic benefits related to the transaction can flow into the enterprise;

Related income and costs can be measured reliably.

The first condition is "transfer of risk and reward". According to the explanation of income criterion, the risk of commodity ownership mainly refers to the losses caused by depreciation, damage and scrapping of commodities. The reward of commodity ownership refers to the future economic benefits contained in commodities, including the economic benefits brought by commodity appreciation to enterprises. It should be pointed out that the "risks and rewards" mentioned here refer to the main risks and rewards related to commodities, and those risks and rewards that have little impact on commodities do not affect the recognition of income. However, this kind of "main risk and reward" related to commodities is essentially the business risk of enterprises, which is made up by the profits obtained by enterprises, and naturally cannot be borne by the state, otherwise it will cause unfair taxation, because the risks of each enterprise are different. Therefore, this article does not meet the conceptual requirements of the income tax law.

The second condition is "whether to retain the right to operate". The income standard interprets it as a commodity that basically continues to be controlled. From the perspective of tax law, it doesn't matter who controls the goods. As long as the ownership of goods changes, it should be recognized as income, so this article does not apply to the income tax law.

The third condition is that "the economic benefits related to the transaction can flow into the enterprise", which is easier to understand. Without the inflow of economic benefits, how can we generate income? The income tax law is consistent with the accounting system, but not with the value-added tax law. Value-added tax is a turnover tax and should be paid as long as the goods are in circulation. Therefore, Article 5 of the Provisional Regulations on Value-added Tax stipulates that "the value-added tax charged by taxpayers to buyers for selling goods or taxable services is the output tax." Obviously, VAT is levied on sales, not income. Sales are not equal to income, and sales do not necessarily constitute income, that is, it does not necessarily lead to the inflow of economic benefits, especially in value-added tax. For example, if we use our own products, there will be no inflow of economic benefits. Therefore, although value-added tax regards it as sales, income tax cannot be regarded as income. However, there are some special circumstances, such as distributing self-produced products as dividends to shareholders. If it is distributed at the cost price, it cannot be recognized as income tax because there is no inflow of economic benefits. However, if it is distributed to shareholders at a price higher than the cost price, it will be treated as income tax.

The fourth condition is that "related income and costs can be measured reliably." This is based on the principle of accounting conservatism. The principle of conservatism conforms to the interests of business owners, but it is meaningless to the state, and in order to prevent tax avoidance, the state can estimate the price by compulsory means. Of course, income and cost should be measured, but the tax law thinks that income and cost should be measured reasonably.

To sum up, the author believes that the income recognition conditions of the income tax law are as follows:

The enterprise obtains the control right of realized economic benefits or potential economic benefits;

The economic benefits related to the transaction can flow into the enterprise;

Relevant income and costs can be measured reasonably.

Two. The definition of "income" in the income tax law According to the accounting system of enterprises, "income" refers to the total inflow of economic benefits formed by enterprises in their daily activities such as selling goods, providing services and using their assets. Revenue does not include money collected for third parties or customers. "

After revision, this definition can basically be used as the definition of income in the income tax law. However, from the perspective of preventing tax avoidance, the collection of money from third parties or customers should be strictly restricted, and those that do not meet the requirements should be treated as income.

In addition, because the income tax does not recognize the concept of "profit", and from the perspective of preventing tax avoidance, "profit" should also pay income tax. Therefore, the term "daily activities" in the above definition should be changed to "business activities".

To sum up, the author thinks that the income of income tax law should be defined as: income refers to the total inflow of economic benefits formed by enterprises in selling goods, providing services and other activities (excluding investment activities) using their assets. Revenue does not include money collected for third parties or customers.

Because of the particularity of construction contract, lease, insurance contract of insurance company, futures and investment, the definition of income is different from general income, so it is necessary to formulate relevant norms separately.

What needs to be explained here is that the enterprise accounting system focuses on the substantial realization of income from the principle that substance is more important than form and prudence. The income tax law focuses on realizing the social value of income from the perspective of the state. For an enterprise, a certain income may not be realized, but from the perspective of the whole society, its value has been realized. In other words, as long as there are benefits flowing into the enterprise or the enterprise can control the inflow of such benefits, the income tax law should be recognized as income. The income tax law does not consider the income risk, because it belongs to the business risk of enterprises and is compensated by the after-tax profits of enterprises. The state does not enjoy all the profits of the enterprise, so it should not bear the business risks of the enterprise. The income tax law usually does not consider the issue of sustainable management, which also belongs to the internal management of enterprises, and the state is not responsible for the problems arising from the internal management of enterprises. As for the reliable measurement of income and cost, the tax law has also given enough attention. Tax law can use the power of the state to estimate the amount of income and cost, ensure notarization and reduce the cost of taxation.