A Detailed Study Of Loan Items

Borrowing is an important source of capital for enterprises. Almost no enterprise can rely on its own capital without borrowing money to meet the needs of capital.

There are different uses of loans, some as liquid capital for daily production and operation activities, some as capital expenditures for the purchase of fixed assets and intangible assets, and other capital operations for foreign investment.

Enterprises will inevitably borrow money when borrowing.

Borrowing costs refer to interest expenses charged by taxpayers for the needs of business activities, including interest on long-term and short-term loans, amortization of discount or premium related to bonds, amortization of auxiliary expenses incurred when arranging loans, and differences arising from foreign currency loans related to borrowing funds, as adjustment of interest rates.

At present, China's tax law is mainly regulated in the pre tax deduction method of enterprise income tax (No. 84 of national tax [2000]).

This method stipulates that the expenses of operating loans that taxpayers generate will conform to the Provisional Regulations on enterprise income tax, and can be deducted directly from the conditions that restrict interest level.

Borrowing costs incurred during purchase, construction and production of fixed assets and intangible assets shall be included in capital costs as the cost of related assets during the period of purchase and construction of related assets.

If the taxpayer does not specify the purpose of borrowing, the borrowing cost shall be calculated on the basis of the proportion of the funds occupied by the operating activities and capital expenditures, and the borrowing cost and the deductible borrowing cost that should be included in the cost of the assets concerned.

When a company intends to borrow and run liabilities, without affecting the effect of raising funds, if the tax law is analyzed and planned from the aspect of tax impact, the cost of borrowing will have the least impact on enterprise income.

The following example is illustrated by an example: the mainland enterprises, according to the 2003 financial revenue and expenditure forecast scheme, had a capital shortfall of 20 million yuan in the current year.

In addition to the normal production and operation, in order to improve the level of information management, enterprises are going to invite a famous software company to develop ERP software for themselves. The software development period is expected to be one year. At the end of the year, it can be put into use and the software cost is 10 million yuan.

It is assumed that the pre tax profit of the enterprise in that year and the next two years is 20 million yuan, the normal interest rate of the bank is 10% a year, and the enterprise is in the normal tax payment period, and has not enjoyed the reduction or exemption of enterprise income tax.

Then, when a company borrows 20 million yuan from a bank, what kind of loan should it borrow?

The author believes that all loans in the loan contract should be liquid funds.

Because the tax law stipulates that the interest rate of the normal interest rate loan is deductible before tax.

Therefore, if the enterprise borrows in the name of working capital, the taxable income after deducting the borrowing cost is 18 million yuan, and the income tax payable is 5 million 940 thousand yuan (1800 x 33%).

The net cash flow of an enterprise is: (pre tax profit - interest payable income tax) * compound interest present value coefficient, then the first year is 10 million 963 thousand and 700 yuan [(2000-200 - 594) x 0.9091], second years is 11 million 73 thousand and 800 yuan [(2000-660) x 0.8264], third year is 10 million 67 thousand and 400 yuan (2000-660) x 2000-660, and net cash flow in the year of the year is RMB yuan.

If the company borrows money in the name of the combination, that is, if the enterprise signs 10 million yuan in the loan contract for the purchase of software and the other 10 million yuan is used for circulating capital, then the interest on the loan of the software purchased by the enterprise can not be deducted directly before tax.

Borrowing costs included in the cost of intangible assets can be amortized to cost in the next two years. The cost of amortization per year in second or third years will be 500 thousand yuan.

The taxable income of the enterprise after deducting the borrowing cost is 19 million yuan, and the income tax payable is 6 million 270 thousand yuan (1900 x 33%).

The net cash flow of an enterprise is: (pre tax profit - amortization of intangible assets expenses - payable income tax) * compound interest present value coefficient, then the first year is: 10 million 663 thousand and 700 yuan [(2000-200 - 627) x 0.9091], second years is 11 million 210 thousand and 100 yuan [(2000-1950 * 33%) * 0.8264), third year is 10 million 191 thousand and 400 yuan [(10 million 191 thousand and 400 *)), and the net cash flow in the year is RMB yuan.

According to the comparison, the net cash flow of borrowing in the name of working capital is more than 39 thousand and 700 yuan over 3 years in combination.

If enterprises are in the period of tax exemption, the opposite is true.

If the enterprise borrows that year, it is in the last year of income tax exemption.

According to the analysis method of the value of the preceding Fund (the same formula), the net cash flow of 3 years is accumulated to 37 million 505 thousand yuan in the name of working capital.

The net cash flow of 3 years was 37 million 765 thousand and 300 yuan in combination.

In the name of combined loans, the net cash flow of borrowing in the name of floating capital for 3 years is more than 260 thousand and 300 yuan.

So borrowing in combination is good.

In short, when borrowing money, enterprises should plan according to their own actual conditions, according to the provisions of the tax law on different borrowing costs, and make plans in a reasonable, lawful and effective way so as to save the financing cost of borrowing.