The income tax of foreign-invested enterprises and foreign enterprises is very similar to corporate income tax, and the calculation and determination of taxable income is also very complicated. With China's entry into WTO approaching, more and more foreign-funded enterprises will participate in China's economic activities, so it is particularly important to master this tax.
The scope of taxation of income tax of foreign-invested enterprises and foreign enterprises and the scope of taxation of taxpayers.
The scope of income tax collection for foreign-invested enterprises and foreign enterprises is the income from production, operation and other income of foreign-invested enterprises and foreign enterprises.
Income from production and operation refers to the income from production and operation of manufacturing, mining, transportation, construction and installation, agriculture, forestry, animal husbandry and fishery, water conservancy, commerce, finance, service, exploration and development and other industries;
Other income refers to profits (dividends), interest, rent, income from property transfer, provision or transfer of patent rights, proprietary technology, trademark rights, copyright income and non-operating income.
As far as taxation is concerned, foreign-funded enterprises are "residents" of China and need to pay taxes in full, while foreign enterprises are "residents" of China with limited taxes. Therefore, the taxable income of these two types of enterprises should be determined according to their income sources. The specific scope of taxation includes:
Income of foreign-invested enterprises headquartered in China from sources inside and outside China;
A foreign-invested enterprise with its head office in China belongs to a legal person or resident company registered in China, which is protected by the laws of China, and shall be subject to income tax according to the principle of the jurisdiction of the resident. The "head office" mentioned here refers to a foreign-invested enterprise registered and established as an enterprise legal person in accordance with the laws of China, and the central organization established in China to manage and control the enterprise;
The income of foreign enterprises that set up offices in China comes from China. Specifically, it includes the income from the establishment, location and production and operation of foreign enterprises in China, as well as the profits (dividends), interest, rent, royalties and other income actually related to the establishment and location of foreign enterprises in China;
Income obtained from China by foreign enterprises that have not established institutions or places in China. Specifically, it includes: profits (dividends) obtained from China; Interest on deposits, loans, bonds, prepayments or deferred payments obtained from China; Rent obtained by leasing the property to the lessee in China; Royalties obtained from providing patents, know-how, trademarks and copyrights used in China; Gains from the transfer of houses, buildings and ancillary facilities, land use rights and other property in China; Other income obtained from China as determined by the Ministry of Finance for taxation;
Commissions, kickbacks, handling fees and other income obtained by foreign enterprises from agency business and provision of other services in the permanent representative offices in China.
tax payer
Taxpayers of income tax for foreign-invested enterprises and foreign enterprises can be divided into two parts:
Some of them are foreign-invested enterprises established in China, including Sino-foreign joint ventures, Sino-foreign cooperative enterprises and foreign-funded enterprises; The other part is foreign enterprises, which refer to foreign companies, enterprises and other economic organizations that have set up institutions and places in China to engage in production and operation, but have income from China.
The institutions and places established by foreign enterprises in China refer to:
Production and operation organization
Including management institutions, business institutions and offices;
Production and business premises
Including factories, places for exploiting natural resources, places for contracting construction, installation, assembly, exploration and other engineering operations, and places for providing labor services;
daili
Refers to companies, enterprises and other economic organizations or individuals entrusted by foreign enterprises to engage in the following businesses, and often contact the procurement business on behalf of the entrusting party, sign procurement contracts, and purchase goods on their behalf; Sign an agency agreement or contract with the principal, often store the products or commodities belonging to the principal, and deliver their products or commodities to others on behalf of the principal; Have the right to sign sales contracts or accept orders on behalf of the principal.
For foreign companies, enterprises and other economic organizations that do not set up institutions or places in China to engage in production and business activities, but obtain dividends, interest, rents, royalties and other income from China, the source control method is adopted, with the foreign companies, enterprises and other economic organizations that obtain the income as taxpayers and the units that pay the income as withholding agents. This source-controlled collection method is called "withholding income tax" internationally.
How to calculate the income tax of foreign-invested enterprises and foreign enterprises
According to the tax law, taxable income is the total income of foreign-invested enterprises and institutions and places engaged in production and business operations established by foreign enterprises in China in each tax year, after deducting costs and losses.
The tax rate is 30%. Local income tax is calculated according to taxable income, and the tax rate is 3%. Unless otherwise stipulated by the state (such as the calculation of income from property transfer), the income from dividends, interests, rents, royalties, etc. obtained from China shall be calculated on the basis of all income, although foreign enterprises have no institutions or places in China, or although they have institutions or places.
The tax year mentioned in the tax law starts from the Gregorian calendar 65438+ 10/day and ends on February 3 1 day. If it is difficult for a foreign enterprise to calculate the taxable income according to the tax year stipulated in the tax law, it may apply, and the tax year of the enterprise is 12 months with the approval of the local tax authorities. If an enterprise starts business in the middle of a tax year, or the actual operating period of the tax year is less than 12 months due to merger or closure, the actual operating period shall be regarded as a tax year. When an enterprise is liquidated, the liquidation period shall be regarded as a tax year.
Determination of total income
The tax law stipulates that the calculation of taxable income of enterprises should be based on accrual basis.
The income from the following business activities of an enterprise can be determined by stages, and the taxable income can be calculated accordingly:
If products are sold by installment, the realization of sales revenue can be determined according to the date when the invoice is issued for the delivered products or commodities, or according to the date when the buyer pays the price as agreed in the contract;
If the duration of construction, installation, assembly engineering and provision of labor services exceeds 1 year, the realization of income shall be determined according to the completion schedule or workload;
If the duration of processing and manufacturing equipment and ships of large institutions for other enterprises exceeds 1 year, the realization of income can be determined according to the completion schedule or the workload completed.
If the income obtained by an enterprise is non-monetary assets or rights and interests, the amount of income can be determined according to different situations:
If a Chinese-foreign contractual joint venture adopts the product sharing method, when the partners share the products, it shall be regarded as income, and the amount of income shall be calculated with reference to the sales price sold to the third party or the average market price at that time;
If a foreign enterprise cooperates in the exploitation of petroleum resources, the partners shall obtain income when sharing crude oil, and the income shall be calculated according to the regularly adjusted price of crude oil with the same quality in the international market;
If the income obtained by an enterprise is other non-monetary assets or rights and interests, the amount of income shall be calculated or evaluated with reference to the current market price.
Chargeable items
Management fee paid to headquarters
The reasonable management fees related to the production and operation of the institutions and places established by foreign enterprises within the territory of China shall be provided and issued with the proof of the collection scope, total amount, basis and method of allocation of management fees, and the verification report of certified public accountants shall be attached, which shall be allowed to be collected after being examined and approved by the local tax authorities. At the same time, foreign-invested enterprises should also reasonably share the management fees related to their production and operation with their branches.
loan interest
For reasonable loan interest related to production and operation, the enterprise shall provide the loan certificate that needs to pay interest, and the local tax authorities shall examine and determine whether to approve the expenditure. Reasonable loan interest refers to the interest calculated at no higher than the general commercial loan interest rate.
business entertainment
According to the provisions of the tax law, enterprises should provide accurate records or vouchers of reasonable social entertainment expenses related to production and operation, which are allowed to be charged as expenses within the following limits:
If the annual net sales amount is less than150,000 yuan, it shall not exceed 5 ‰;
The part with annual net sales exceeding150,000 yuan shall not exceed 3 ‰ of net sales;
If the total annual business income is less than 5 million yuan, it shall not exceed10 ‰ of the total business income;
If the total annual business income exceeds 5 million yuan, it shall not exceed 5‰ of the total business income of this part.
According to the net sales, the industries that receive social entertainment fees are: industrial manufacturing, planting, aquaculture, commerce and so on.
According to the business income, the industries that receive social entertainment fees are: hotels, restaurants, entertainment, transportation, construction and installation, finance, insurance, leasing, repair, design consulting and other service industries.
Cross-industry enterprises should calculate the limit of social entertainment expenses according to net sales or business income respectively. If the division is not clear, it can be determined according to the industry to which their main business projects belong.
exchange gain or loss
Unless otherwise stipulated by the state, the exchange gains and losses incurred by an enterprise in preparation, production and operation shall be reasonably listed as the gains and losses of each period.
Wages and welfare expenses
Wages and welfare expenses paid by enterprises to employees shall be submitted with payment standards and documents and materials on which they are based, and shall be allowed to be charged after being examined and approved by the local tax authorities. However, enterprises may not pay overseas social insurance premiums for employees working in China.
bad-debt provision
Enterprises engaged in credit, leasing and other businesses may, according to actual needs, report to the local tax authorities for approval, and make provision for bad debts of no more than 3% year by year according to the balance of loans at the end of the year (excluding interbank borrowing), which will be deducted from the taxable income of that year. In other industries, enterprises can apply when necessary, and after approval by the local tax authorities, provision for bad debts shall be made according to the year-end balance of accounts receivable, notes receivable and other accounts receivable.
The actual bad debt loss of the enterprise, which exceeds the bad debt reserve of the previous year, can be classified as the current loss; The part less than the previous year is included in the taxable income of this year. The bad debt loss of an enterprise must be approved by the local tax authorities. The so-called bad debt loss generally refers to the following receivables:
Due to the bankruptcy of the debtor, the money that cannot be recovered after being paid off with its bankrupt property;
Due to the death of the debtor, it cannot be recovered after the settlement of his estate;
Money that cannot be recovered for more than two years due to the debtor's overdue performance of debt repayment obligations.
Income tax paid abroad
Profit (dividend), interest, rent, royalties, etc. Unless otherwise stipulated by the state, income tax paid abroad from institutions and places established by foreign enterprises in China that are actually related to institutions and places outside China can be deducted as expenses.
Items that are not allowed to be charged
Unless otherwise stipulated by the state, the following items shall not be listed as costs, expenses and losses:
Expenditure on the purchase and construction of fixed assets; The transferee of intangible assets, development expenditure and capital interest; Various income taxes; Illegal business fines and confiscation of property losses; Late fees and fines for various taxes; Compensation for losses caused by natural disasters or accidents; For donations other than domestic public welfare and relief; Royalties paid to the headquarters; Other expenses unrelated to production and operation.
Tax treatment of assets
fixed assets
Fixed assets refer to houses, buildings, machines, machinery, means of transport and other equipment, appliances and tools related to production and operation with a service life of more than one year. Items that do not belong to the main equipment of production and operation, with a unit price of less than 2,000 yuan or a service life of less than two years, can be classified as current assets for accounting, and the expenses can be calculated according to the actual use series.
The valuation of fixed assets should be based on the original price. Please refer to "Enterprise Income Tax" for the valuation of fixed assets obtained in various ways.
Before calculating the depreciation of fixed assets, the residual value should be estimated. The so-called residual value of fixed assets refers to the residual value recovered when the fixed assets are scrapped. The detailed rules for the implementation of the tax law stipulate that the residual value of depreciation of fixed assets is generally not less than 10% of the original price. If it is really necessary to leave no residual value or leave less residual value, it must be reported to the local tax authorities for approval. Enterprises should use the straight-line method to calculate the depreciation of fixed assets. The annual depreciation calculated by this method is the same in the expected service life of fixed assets, and its calculation formula is:
Annual depreciation amount = (estimated residual value of original value of fixed assets) ÷ estimated service life of fixed assets.
Annual depreciation rate = annual depreciation amount ÷ original value of fixed assets × 100%
Monthly depreciation amount = annual depreciation amount+12
In addition, the detailed rules for the implementation of the tax law also stipulate the minimum depreciation period of fixed assets. As shown in Table 7- 1:
Table 7- 1
Minimum depreciation period of fixed asset type (year)
Houses and buildings 20
Trains, ships, machines, machinery and other production equipment 10
Other means of transportation, electronic equipment and appliances, tools and furniture related to production and operation 5
The depreciation of fixed assets of an enterprise shall be calculated by the straight-line method; If other depreciation methods need to be adopted, the enterprise may apply, which will be reviewed by the local tax authorities and reported to State Taxation Administration of The People's Republic of China for approval step by step.
If an enterprise needs to accelerate the depreciation of fixed assets or shorten the depreciation period for special reasons, it shall apply to State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) for approval. Fixed assets that need to be shortened for special reasons include: machinery and equipment that are strongly corroded by acid and alkali, factories and buildings that are in a state of vibration and trembling all the year round; Machinery and equipment that are running day and night all the year round because of improving utilization rate and strengthening use intensity; The fixed assets of a Chinese-foreign contractual joint venture shall be owned by the Chinese partner after the term of cooperation is shorter than the depreciation period stipulated in the detailed rules for the implementation of the tax law.
invisible assets
Intangible assets refer to assets that do not have physical form, but can bring economic benefits or rights to enterprises for a long time to come. It mainly includes industrial property rights such as patent right, proprietary technology, trademark right, copyright, site use right and other intangible assets.
The valuation of intangible assets of enterprises should be based on the original price. Specifically, the original price of the transferred intangible assets is the amount actually paid at a reasonable price, including drawing materials fees, technical service fees, personnel training fees and other related expenses; The original price of self-developed intangible assets is the actual expenditure incurred in the development process; As an intangible asset for investment, the original price is the reasonable price stipulated in the agreement and contract.
The value of an enterprise's intangible assets should be amortized within the whole service life (i.e. income or expenses) by the straight-line method. Intangible assets as investment or transferee can be amortized according to the service life stipulated in the agreement or contract; For intangible assets that have no specified service life or are developed by themselves, the amortization period shall not exceed 10 year.
deferred assets
Deferred assets refer to expenses that cannot be fully included in the current year's profit and loss and should be amortized in future years.
In addition to the improvement expenditure of renting fixed assets, it is mainly the start-up expenses of enterprises.
The so-called start-up expenses refer to the expenses related to the establishment of the enterprise during the period from the date when the enterprise is approved to start production and operation (including trial production and trial operation). Including: salary, travel expenses, training fees, consulting and research fees, communication entertainment fees, document printing fees, communication fees, graduation ceremony fees, etc.
However, it does not include the costs of construction and purchase of fixed assets and intangible assets, and the costs that should be borne by investors according to the provisions of contracts, agreements and articles of association. The start-up expenses of an enterprise shall be amortized by installments from the month following the start of production and operation;
The amortization period shall not be less than 5 years; The amortization method should adopt the straight-line method. For an enterprise with an operating period of less than 5 years, the start-up expenses can be amortized by the straight-line method according to the actual operating period after being examined and approved by the tax authorities.
goods in stock
The inventory of an enterprise includes commodities, finished products, products in process, semi-finished products, raw materials and materials. The valuation of inventory should be based on the cost price. Enterprises can use one of the first-in first-out method, moving average method, weighted average method and last-in first-out method to calculate the actual cost of issuing or recovering various inventories. Once the valuation method is selected, it shall not be changed at will. If it is determined that the valuation method needs to be changed, it shall be reported to the local tax authorities for approval before the start of the next tax year.
Calculation formula of taxable income
manufacturing industry
Taxable income = product sales profit+other business profit+non-operating income-non-operating expenditure
Product sales profit = net product sales-product sales cost-product sales tax-(sales expenses+management expenses+financial expenses)
Net product sales = total product sales-(sales return+sales discount)
Product sales cost = current product cost+initial product inventory-final product inventory
Current product cost = current production cost+initial semi-finished products, WIP inventory-final semi-finished products and WIP inventory.
Current production cost = direct materials consumed in current production+direct wages+manufacturing expenses.
Taxable income = sales profit+other business profit+non-operating income-non-operating expenses.
Sales profit = net sales-sales cost-sales tax-(sales expenses+management expenses+financial expenses)
Net sales = total sales-(sales return+sales discount)
Cost of goods sold = beginning inventory of goods+[current purchase-(purchase return+purchase discount)+purchase cost]-ending inventory of goods]
service industry
Taxable income = net operating income+non-operating income-non-operating expenditure
Net operating income = total operating income-(operating income tax+operating expenses+management expenses+financial expenses)
For other industries, refer to the above formula.
recuperate
According to the provisions of the tax law, the annual losses incurred by enterprises with foreign investment and institutions and places engaged in production and business operations established by foreign enterprises in China can be made up with the income in the next tax year. If the income in the next tax year is insufficient, it can be made up year by year, but the longest period shall not exceed five years.
The concept of loss referred to in the tax law is not the amount of loss reflected in the financial statements of enterprises, but the amount of loss in the financial statements of enterprises adjusted according to the provisions of the tax law.
If an enterprise suffers annual losses, the profits realized in the next year shall first make up for the losses in the previous year; If the profit realized in the next year is greater than the loss in the previous year, all the losses in the previous year should be made up in one lump sum. If an enterprise continues to lose money, it should first make up for the loss in the first loss-making year and then make up for the loss in the second loss-making year, and so on: the order of making up for several loss-making years cannot be reversed, nor can it make up for the loss in any loss-making year at will.
"Make up the losses year by year, with a maximum of 5 years" refers to the losses actually incurred in a certain year (excluding the losses carried forward from the previous year), and six consecutive years are regarded as the recovery period of the actual losses in that year. During the five-year loss recovery period, no matter which year the profit or loss is made, it is regarded as a recovery year, and the loss that has been insufficient for five consecutive years cannot be recovered from the sixth year.
If an enterprise loses money at the initial stage of its establishment, the year in which it turns losses into profits within five years is a profit-making year, and productive foreign-invested enterprises enjoy preferential treatment of regular tax exemption and tax reduction by half from the profit-making year;
During the regular tax reduction and exemption period, no matter which year losses occur, this year is still a tax reduction and exemption year. In other words, the period of regular tax reduction and exemption should be calculated continuously, and the period of regular tax reduction and exemption should not be extended because of losses during the period. Of course, the losses incurred during the tax exemption period can still be made up in the next five years; If the loss recovery period and the tax reduction and exemption period are in the same time period, the two periods should still be calculated according to the provisions of the tax law, and the periods cannot be extended each other.
Deduction of tax paid on overseas income
The income tax paid by a foreign-invested enterprise from outside China may be deducted from its taxable amount at the time of consolidated tax payment, but the deduction amount shall not exceed the taxable amount of its overseas income calculated in accordance with the provisions of this Law.
The income tax paid overseas as mentioned in the tax law refers to the income tax actually paid overseas by foreign-invested enterprises on the income originating outside China, excluding the taxes compensated after tax payment or borne by others.
The taxable amount of overseas income calculated in accordance with the provisions of this law mentioned in the tax law refers to the taxable amount calculated by foreign-invested enterprises after deducting the costs, expenses and losses that should be shared in accordance with the relevant provisions of the tax law and these Detailed Rules. The tax payable is the deduction limit, which should be calculated by country rather than by project, and its calculation formula is as follows:
Deduction limit of overseas income tax rate = total taxable income of domestic and overseas income calculated according to tax law × total income of overseas income/domestic income.
If the income tax actually paid by a foreign-invested enterprise from abroad is lower than the deduction limit calculated in accordance with the above provisions, the income tax actually paid abroad can be deducted from the taxable amount; If the deduction limit is exceeded, the excess part shall not be deducted as tax, nor shall it be listed as expenses. However, the balance that does not exceed the deduction limit in the next year can be used for supplementary deduction, and the maximum period of supplementary deduction shall not exceed 5 years.
The above provisions only apply to foreign-invested enterprises headquartered in China. Enterprises with foreign investment shall, when deducting taxes in accordance with the provisions of the tax law, provide the original tax payment vouchers issued by overseas tax authorities in the current year, and shall not use photocopies or tax payment vouchers in different years as evidence of tax deduction.
The "total taxable income of domestic and overseas income calculated according to the provisions of the tax law" mentioned in the above formula for calculating the deduction limit refers to the total taxable income calculated according to the enterprise income tax rate of 30% stipulated in the tax law; It cannot be calculated at any low tax rate that is actually applicable to foreign-invested enterprises.
Tax adjustment project
Like enterprise income tax, the calculation of income tax for foreign-invested enterprises and foreign enterprises is also adjusted according to the total profit. Please refer to the relevant contents of "Enterprise Income Tax" for specific items of increase or decrease.