How To Deal With The Income Tax When There Is A Combined Business?

An enterprise merger involves the pfer of all its assets and liabilities to another existing or newly established enterprise (hereinafter referred to as a merged enterprise) by merging the enterprise (one or more enterprises that do not need to go through the legal liquidation process), to exchange for the shares or other assets of the merged enterprise for its shareholders, so as to realize the merger of two or more than two enterprises according to law.

The income tax of enterprise merger shall be dealt with in accordance with the specific way of Merger: (1) enterprise merger. Under normal circumstances, the merged enterprise shall be deemed to pfer and dispose of all assets at fair value, calculate the income from the pfer of assets, and pay income tax according to law.

The losses in the previous year of the merged enterprises shall not be pferred to the merged enterprises to make up for them.

When a merger company accepts the assets of the merged enterprise, it can determine the cost according to the value recognized by the appraisal. The share of the merged enterprise that the shareholders of the merged enterprise get is regarded as the difference between the merged company and the merged enterprise to recover the shares of the company and the difference between the recovery price and the issue price for the realization of the merger.

(two) the acquisition price paid by the merged enterprise to the merged enterprise or its shareholders, except cash, securities and other assets (hereinafter referred to as non equity payment) other than the shares of the merged company, is not higher than the 20% of the par value paid by the tax (or the value of the capital stock paid). After examination and verification by the tax authorities, the parties may choose the following provisions to deal with the income tax: 1, the merged enterprises do not confirm the pfer or loss of all assets, and do not calculate the income tax.

All the enterprise income tax items previously consolidated by the merged enterprises shall be borne by the merged enterprises. If the losses of the previous year do not exceed the statutory compensation period, the combined enterprises shall continue to make up for the income that is related to the assets of the merged enterprises in accordance with the regulations.

According to the following formula, a certain tax year can make up for the loss of the merged enterprise: the amount of income before the merger of a consolidated tax year, the fair value of all the net assets of the merged enterprise after the fair value of the net assets of the merged enterprise.

2, the shareholders of a merged enterprise shall exchange the equity of the merged company (hereinafter referred to as the old stock) with the shares held by the original merged enterprise (hereinafter referred to as the "new shares"), and shall not be deemed to sell the old shares or purchase the new shares.

The cost of changing the shares of the shareholders of the merged enterprise must be determined on the basis of the cost of the old shares held by them.

However, all non equity payments paid by shareholders of the merged enterprises who have not exchanged new shares shall be regarded as the pfer proceeds of the old shares held by them. The income or loss of the pfer of the property shall be calculated according to the provisions, and the income tax shall be paid according to law.

3, merging enterprises accept the tax cost of all assets of the merged enterprise, and must be determined on the basis of the original book net value of the merged enterprise.

The authority is: 1. The enterprises involved in the merger of enterprises shall apply for verification after the application of the enterprises in the same district or county. 2, the merger of enterprises involves enterprises not in the same districts and counties. In order to facilitate the convergence of business tax matters, the enterprises shall apply for approval. The local tax authorities shall verify the reports and submit them to the Municipal Council for verification and confirmation. 3, the merger of municipal enterprises (including the merger of municipal enterprises and district and county enterprises), whether or not they are in the same district or county, shall be filed by the enterprises. The local tax authorities shall verify the reports and submit them to the Municipal Bureau for verification and verification. 4, the enterprises involved in the separate businesses of enterprises are not in the same province (autonomous region or municipality directly under the central government), they must be reported to the State Administration of Taxation for examination and confirmation. Audit of Taxation Department

When the enterprises are engaged in the whole business and need to examine the tax department, they should provide the following information to the tax department: 1, a copy of the tax registration certificate of the parties to the merger.

2, a legally binding agreement or contract recognized by the parties to the merger.

3, the implementation plan of merged enterprises.

4, provide financial reports or certificates of assets assessment and tax matters audited by certified public accountants and registered tax agents.

5, the final financial statements of the merged company.

6, enterprises with competent departments provide relevant information of the competent departments.

7, other information required by the tax department.

(three) the realization of the merger between the affiliated enterprises by exchanging common stocks must conform to the principle of fair trade between independent enterprises. Otherwise, the tax authorities have the right to adjust the impact on the taxable income of enterprises.

(four) if the assets and liabilities of the merged enterprises are basically equal, that is, the net assets are almost zero, the merged enterprises will absorb the merger by assuming the total debts of the merged enterprises, and do not regard them as pferring or disposing of all assets according to fair value by the merged enterprises, and do not calculate the income from the pfer of assets.

The cost of accepting all assets of the merged enterprise must be determined on the basis of the original book value of the merged enterprise.

The shareholders of the merged enterprise are deemed to give up the old shares held without compensation.

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