The Three Case Is Not Accelerated Depreciation.

Many enterprises' financial personnel believe that enterprises should adopt the accelerated depreciation method as far as possible, so as to reduce the enterprise income tax to be paid.

Is that right?

If the company does not mention depreciation, it will increase the taxable income and increase the income tax. If depreciation is added, it will increase the cost and reduce the profit, thereby reducing the income tax.

The role of depreciation in tax deduction is called depreciation allowance or tax baffle.

According to the enterprise accounting system, the method of depreciation of fixed assets can be selected in the average age method, the workload method, the double declining balance method and the annual sum method.

Among them, the double declining balance method and the annual sum method belong to the accelerated depreciation method. The depreciation can be used in the earlier stage of assets utilization, and the taxable income should be deducted to pay less taxes.

This is why many financial officers believe that accelerated depreciation can be less tax.

In fact, regardless of the depreciation method used, the total amount of depreciation is the same, and the overall corporate income tax will not be reduced.

The significance of accelerated depreciation is that accelerated depreciation can make the cost of fixed assets quicker and be compensated in the period of use, which can make the early cost of accounting move backward.

Enterprises have less profits in the early stage and less taxes. Later profits are more and more taxes are paid.

Thus, the deferred payment of income tax is equivalent to the use of an interest free loan for the production and operation of its own enterprises, and there is no financial risk.

However, according to the tax law, the depreciation method of fixed assets should generally adopt the average age method, and the accelerated depreciation must be examined by the local competent tax authorities and submitted to the State Administration of Taxation for approval.

Therefore, it is not necessary to accelerate depreciation.

When planning the depreciation of fixed assets, in addition to considering the possibility of accelerated depreciation, we should take into account other factors. In the following three cases, we should be cautious in accelerating depreciation. Otherwise, we will not only fail to achieve the purpose of planning, but also increase tax expenditure.

During the tax relief period, it is not appropriate to accelerate the depreciation of enterprise income tax. At present, the rate of corporate income tax is proportional to the tax rate. The depreciation of fixed assets in the early stage of use and the depreciation in the later stage are the methods of accelerated depreciation.

However, if the enterprises are in the period of tax reduction and exemption, the impact of accelerated depreciation on corporate income tax is negative, not only can not pay less taxes, but will pay more taxes.

For example, the amount of taxable income that a company does not mention depreciation before 1998 to 2002 is 10 million yuan. There is no other tax adjustment matters, and 1998 and 1999 are tax exemption periods.

If the average age method is adopted, the annual depreciation amount will be 4 million yuan; the double depreciation method will be used for depreciation of 8 million yuan, 4 million 800 thousand yuan, 2 million 880 thousand yuan, 2 million 160 thousand yuan, and 2 million 160 thousand yuan respectively.

Using the average age method, the average annual tax burden in 5 years is (3000-1200) x 33% (5) = 118.8 (10000 yuan); accelerated depreciation method is adopted, the average annual tax burden is (3000-288 216-216) x 33% 5 5 = 150.48 (10000 yuan).

It is obvious that accelerated depreciation increases the tax burden by 316 thousand and 800 yuan per year over the average age.

To speed up depreciation, we should consider the 5 years' compensation period, the Provisional Regulations on enterprise income tax and the income tax law of foreign invested enterprises and foreign enterprises, and make a unified stipulation on the time and method for making up the losses of domestic and foreign enterprises, that is, the annual losses incurred by enterprises can be made up by the income of the next tax year, but the longest period should not exceed 5 years.

Because the tax law strictly limits the period of compensation, enterprises must make a reasonable estimation of the profit level in the following year according to their own specific circumstances, so that the profits of the same production and operation will be more substantial.

Especially for some high risk, high yield and unstable technology enterprises, it is necessary to plan rationally and avoid accelerating depreciation to bring adverse effects to enterprises.

If the the Yellow River company adopts accelerated depreciation, the total loss of that year is 10 million yuan, and then the total pre tax income for 5 consecutive years will be 7 million yuan. Then the 7 million yuan can make up for the loss in full and no tax is required. The remaining 3 million yuan loss should be made up after tax profits. The company with the same size as the the Yellow River company calculates the depreciation by the average age method. The total deficit in that year is 7 million yuan. After that, the total income before tax for 5 consecutive years is 7 million yuan.

In the same way, the the Yellow River company increased the tax burden by 300 x 33% = 99 (10000 yuan) because of the different depreciation methods.

The accelerated depreciation of enterprises should be considered in the overall interests of enterprises. Under the current system, accounting reports of enterprises in China should generally be provided to departments of industry and commerce, taxation, finance, finance and other investors, and listed companies also need to announce their financial reports to the public regularly.

A financial report is a document that reflects the financial condition of an enterprise for a specific date and the operating results and cash flow of an accounting period. The user of the report can calculate the financial indicators such as net sales interest rate, asset turnover ratio, return on net assets and asset liability ratio, so as to judge the profitability, debt paying ability, growth and development ability, and asset operation status of the enterprise as the main basis for making decisions.

If we choose to accelerate depreciation from the perspective of lightening the tax burden, we will lose money and make investors think that the profitability of enterprises is poor. They will not be injected into the capital and lose the opportunity to grow and develop. It is like picking up sesame seeds and losing watermelons.

Many private enterprises, in order not to pay income tax, make huge losses in the statements. Once they need to go to bank loans, the loss reflected in the statements is a case in point.

Enterprises should survive and develop profits, and sales growth can not be avoided. The financial significance of sales growth is capital growth.

Relying entirely on internal financing will restrict the development of enterprises. Relying entirely on external financing will also be impossible for financial risks to be realized. Therefore, enterprises should take accelerated depreciation into consideration in the overall business decision, and do not lose money in order to reduce tax burden, and can not get the funds to support sales growth.

In short, when accelerating depreciation, enterprises should pay close attention to the preferential tax period and the 5 year compensation period, and take advantage of the advantages and avoid disadvantages. We should use the management accounting method, pay attention to tax and non tax factors, and make overall arrangements to maximize the interests of enterprises.