PE Dispute Over Investment Premium Tax: The Two Sides Are Still In The Game Stage.

In January 24, 2012, the Shanghai Han Li prospect equity investment partnership (hereinafter referred to as the "Han Li prospect") first outlined the situation of the enterprise's original shareholders' recovery of corporate income tax caused by PE investment on micro-blog.

The micro-blog said: "the festival and Beijing people chat, found that Beijing tax bureau began to recover PE investment enterprises because of PE premium investment so that the founder of the company on the book (registered capital) appear part of the income tax."

Then, investors in the industry responded to this micro-blog and confirmed that their project in Beijing had already encountered this situation.

Two weeks ago, an example was also found in some place in Shandong. The Inland Revenue Department paid a premium for PE investment, requiring the original shareholders to pay corporate income tax on the premium portion.

Many opinions are concerned that if the amount of tax is too large, the original shareholders will not be able to pay for it.

Insiders generally believe that this practice is "absurd", without basis, and even called "bloody battle to the end".

However, according to Caixin reporter, in some cases where the tax amount is relatively small, the original shareholders have paid taxes according to the requirements of the tax authorities.

"Enterprises generally do not dare to really strive to the end, under the eaves, how dare not bow.

The case has won, and the competent tax authorities may have stuck elsewhere. You might as well have paid it. "

This reflects the helpless psychological situation of enterprises.

With the development of PE and venture capital fund (VC), the tax issue of equity trading is becoming more and more complicated.

"It is an inevitable trend for the Inland Revenue Department to become more cautious and prudent in the tax related to equity investment.

This piece is very complicated and difficult to grasp. "

A tax expert said.

At present, the Inland Revenue Department has no definite policy on this.

Similar cases occurred in Shenzhen two years ago, and finally ended in the absence of a clear basis by the Inland Revenue Department.

Blur zone

The premium is due to the PE capital increase. Although the details of the arrangement vary, the general pattern is very similar.

That is, if the original shareholders' shares are not fixed, the registered capital will be adjusted according to the amount of shares invested and acquired by PE, and the premium will be included in capital reserve.

Tax experts generally believe that this is not the right time to pay taxes.

As part of the capital accumulation is directly invested by the invested enterprise, the original shareholder of the enterprise has not disposed of its own shares, and has not produced the actual benefits, and should not pay taxes.

In different cases, the tax authorities put forward different opinions on this.

In the case of Shenzhen, the tax authority said that the PE premium share was regarded as the original shareholder's giving up some of the rights and interests first, and then the increase of the shares by the premium. In the case of Shandong, the tax authority indicated that if the PE par value was increased, there was no need to pay taxes. After the premium, the overall value of the enterprise increased. If the original shareholder did not increase capital, the original shareholding would be maintained directly, equivalent to that the original shareholder had gained more value than the original.

Tax experts say

As the Inland Revenue Department did not put forward a clear basis, most of these cases were ignored.

In the case of Shenzhen, a tax practitioner who was responsible for communicating with the tax authorities said: "at that time, the Inland Revenue Department had no precedent for such problems, so the attitude was not very strong."

But recently, similar cases began to appear frequently.

Not only part of Beijing's tax authorities have made a statement, but the investors in the Shandong case have also received a similar reply when they consulted the Shanghai tax authorities.

In spite of this practice, no formal policy has been formed.

Tax 12366 answered the question clearly.

A tax service professional organization analysis, PE premium entry leads to tax should be divided into several cases.

More generally, PE is often overvalued, while the Inland Revenue Department does not fully understand the valuation method of PE.

According to legal procedures, PE should apply to the competent tax authorities for registration changes after investment.

While the registration changes do not provide enterprise valuation materials or assessment reports, tax authorities often judge whether the investment premium is reasonable based on subjective judgment.

"Too much premium is easy for tax authorities to pay attention to."

A tax consultant from KPMG said.

In the current capital market, it is not uncommon for PE to invest several times or even more than ten times.

"When the Inland Revenue Department is not clear about the specific circumstances, it is doubtful whether there is any pportation of interests.

If the tax leaks are caused by the purpose of profit pfer or tax avoidance, the competent tax authorities should be responsible. "

Therefore, the industry believes that the tax authorities' actions are also exploring in practice, and the arrangement of enterprise agreements should be seen in detail.

Another four big accounting firm professionals said: "now the overall environment is uncertain, both sides are exploring and playing stage.

If we want to levy this tax, we need taxpayer cooperation to some extent. Once the taxpayer pays, even if the final proof is wrong, someone will share the administrative risk with the tax authorities. "

In addition, the above said that the situation of local enterprises is often extremely complex, and there is interest game with local governments.

"Sometimes the local government puts pressure on the tax authorities, that taxpayers earn a lot, but they do not contribute enough to local taxes, or the interests of enterprises are related to the previous interests of the government.

But these are cases and not legal acts. "

PE collection and management problems

After the occurrence of such cases, the industry is concerned about

Wang Qingsong, partner of Shanghai Jin Tian Cheng law firm, said that since the law only stipulates that "share pfer" should be taxed, the Inland Revenue Department is equivalent to the expansion or analogy of the original law, and it should give reasonable grounds.

But not many companies dare to fight it out.

"PE is not the type of enterprise that tax authorities love."

Professionals say.

With the rise of PE, many local governments have introduced a series of preferential tax policies to attract the arrival of PE.

But a small number of governments do not fully understand PE.

"They think that PE is rich and talented, but also can invest in local projects and contribute to local finance and economy."

The above professionals said, "but this is not the case.

PE investment cycle is very long, not much revenue generated in the short term, and many PE investments are not registered.

PE is attractive to local governments, but the tax authorities are not enthusiastic about it.

"Tax authorities like normal enterprises.

Normal operation has stable taxation.

And PE usually does not open, open to eat for three years, some offices even people do not, so that the tax authorities are difficult to grasp.

Insiders say.

Tax payments are fluctuating. Once there is a paction, a large amount of revenue is generated, and the paction structure is very complex. All these make PE a tax headache for the tax authorities.

"Some agencies do not know about PE, and even some industrial and commercial bureaus in some areas do not allow premium to increase capital, so they can only increase their capital at par.

In this way, the premium paid by the investment enterprise is regarded as a donation to the enterprise, and it must bear corporate income tax.

The above said.

"Generally speaking, PE is just as easy as tax avoidance and tax evasion."

A tax official from four big accounting firms said.

He analyzed that, with the PE exit, the most popular way of launching is IPO, which is difficult to avoid tax, because accounts are recorded in securities companies.

"Unless a listed PE goes away immediately, few teams run alone.

If PE makes money, he doesn't care about paying taxes. "

Therefore, he said, PE does tend to make tax planning, but more is the problem of postponed tax payment.

Because the paction structure of PE investment is often complex and sometimes involves the reorganization of enterprises, PE will tend to postpone the tax time point to the realization of real income.

"The case of PE premium premium leading to the original shareholder's tax payment may be that the tax authorities suspect that the original shareholder is profitable but intends to postpone the tax payment point."

Anti tax war

In 2008, the new "

The tax authorities began to be sensitive to the general principle of anti tax avoidance, and a vague definition of "not having a reasonable commercial purpose" in the tax law made the tax authorities' suspicion of tax avoidance expanded indefinitely.

With the boom of PE, frequent equity trading has brought new challenges to tax authorities.

Equity pactions are often diverse and complex, and many cases are new phenomena in the field of Taxation in China.

While exploring and practicing the tax authorities, the degree of concern and strict supervision of equity trading is also gradually increasing.

In 2010, the State Administration of Taxation (hereinafter referred to as the State Administration of Taxation), in implementing the notice of implementing some tax issues in the enterprise income tax law, made clear that the enterprises recognized the income and paid the income tax when they pferred the share rights, and pferred the equity income to the share pfer after deducting the cost incurred by the equity interest.

When calculating the proceeds from the pfer of shares, an enterprise may not deduct the amount that may be allocated according to the share interest retained in the retained earnings of the invested enterprise.

At the same time, it is clear: "the capital stock of the invested enterprise will be converted into capital stock by the capital premium formed by the equity premium, not the dividend and bonus income of the investor enterprise, and the investor enterprise shall not increase the tax base of the long-term investment."

However, the PE premium is not clear to the Inland Revenue Department, which belongs to the "share pfer" stipulated in the above. The premium is too high, and the arrangement of the agreement is complex. In some cases, it also involves the suspicion of interest pfer, tax avoidance and so on, thus becoming a difficult problem.

The most difficult to find is the "dollar fund" plus "overseas listing" mode.

In this mode, pactions are carried out overseas, with only the shares being traded in the territory.

Although a company whose shares are trading in the territory is an agent withholding agent, it has not obtained the paction interest, and can only assist the tax authorities to recover the tax.

"If the investors of the US dollar fund are individuals, it is more difficult to trace them."

Under such circumstances, the tax authorities have increased the tax collection for such pactions.

"The local tax authorities once saw on television news that an overseas paction involved the equity of domestic enterprises and then seized it."

A tax office staff said.

For example, Jiangdu and other places eventually succeed in collecting taxes for overseas pactions, which have become a typical example of successful taxation.

With these encouragement, the tax authorities' sensitivity to equity trading and equity investment institutions has been greatly improved.

At present, according to the different forms of establishment, PE mainly pays 25% of corporate income tax or 20% of personal income tax.

Fund management companies also need to pay 5% business tax.

There are preferential taxes on income tax for PE and VC.

According to their investment fields, a certain degree of tax relief or local financial return can also be obtained.