Common Tax Issues And Handling In Enterprises

In November 2011, an enterprise approved the preparation for construction. In December 25th, it obtained business license and was formally engaged in production and operation in January 1, 2012. For this reason, corporate finance personnel call for consultation. enterprise During the preparatory period, the expenditure should be treated as a start-up fee, but whether the expenditure before the enterprise obtains the business license should be treated as a start-up fee, and how the corresponding invoice should be issued. After obtaining the business license, there will be no income generated after the formal operation of the business license, how to manage the above-mentioned start-up expenses, how to confirm the relevant deficit year, and whether it is necessary to participate in the 2011 year enterprise income tax settlement. The registered company is analyzing the above problems as follows.

First, generally speaking, the preparatory period is from the date when the enterprises are approved to prepare for construction. production The period of the operation (including trial production and trial operation). The date on which the company is registered is the date specified in the business license. The expenses occurring during this period are allowed to be deducted as the pre tax of the start-up cost. The establishment cost refers to the expenses during the preparatory period, including personnel salaries, office expenses, training fees, travel expenses, printing fees, registration fees, and foreign exchange gains and losses and interest expenses which are not included in the cost of fixed assets and intangible assets. business How to conduct tax treatment on entertainment expenses, advertising and business publicity fees should be analyzed and verified according to the situation.

Second, the preparatory construction fee before the production and operation of an enterprise should include the expenditure before obtaining the business license, but the name of the invoice should be the name of the company specified in the notice of pre approval of the name (which can be found on the professional registration company www.11company.com of Hongkong). If the name on the invoice is inconsistent with the name of the later registered company, unless it provides sufficient and conclusive evidence to prove that the two companies are the same company, it is usually not deductible before tax.

The third is about the handling of the opening fee. The Circular of the State Administration of Taxation on the connection of certain tax matters of enterprise income tax (National Tax Letter No. 2009] No. 98) stipulates that in the new tax law, the cost of opening (raising) is not clearly listed as a long-term prepaid expenses, and the enterprise can deduct it once or twice a year on the date of its operation. It can also be dealt with according to the regulations on the long term prepaid expenses in the new tax law. Once it is selected, it can not be changed. The establishment fee is not a pre tax deduction item before the start of operation. The deduction date of the pre tax deduction is that the year before the start of operation, the year before the start of operation can not be deducted before tax, and can only be collected.

Fourth, during the period of preparation, it can not be counted as the year of loss. The Circular of the State Administration of Taxation on the implementation of certain tax issues in the enterprise income tax law (National Tax Letter No. 2010 [79]) clearly states that the year when the enterprise starts production and operation is the year of calculating the profit and loss of the enterprise. The expenses for the preparatory construction expenses during the preparatory activities of enterprises before they are engaged in production and operation shall not be counted as losses in the current period. They shall be implemented in accordance with the ninth provisions of the state tax letter [2009] 98. Therefore, when the enterprise is engaged in production and operation, the expenses for the preparatory construction will not be counted as a loss in the current period. Here, "the year when an enterprise starts its production and operation" shall refer to the year when the assets of the enterprise are put into use or the year when the foreign business activities begin.

Fifth, there is no need for corporate income tax settlement during the preparation period. The Circular of the State Administration of Taxation on Issuing the administrative measures for the calculation and settlement of enterprise income tax (third) [2009] 79 stipulates that taxpayers who engage in production and operation (including trial production and trial operation) or those who terminate business activities in the middle of the tax year, whether in the period of tax reduction or exemption, regardless of profits or losses, shall pay the enterprise income tax according to the relevant provisions of the enterprise income tax law and its implementing regulations and the present measures. Obviously, the main body of the enterprise income tax settlement is engaged in production and operation (including trial production, trial operation) in the tax year, or the taxpayer who terminates business activities in the middle of the tax year. During the preparatory period, enterprises do not have production or operation, and of course, they do not need to make final settlement. For the purpose of this case, the enterprise does not need to participate in the final settlement of the 2011 year, but if the preparatory period of the enterprise is extended to February 2012, and from March, it will be engaged in production and operation. If the date of preparation for the enterprise is in the same year as the date of starting production and operation, the 2012 year should be regarded as a settlement period.

Sixth, the handling of business entertainment and advertising costs during the preparation period. From the point of view of Taxation, the cost of starting an enterprise does not include the business entertainment expenses, advertising and business publicity fees. The expenses for advertising and business publicity during the preparation period are deducted according to the relevant provisions of the enterprise income tax law and its implementation regulations concerning the expenses of advertising and business publicity. Specifically,

(1) handling of business entertainment expenses. The forty-third provision of the regulations on the implementation of the enterprise income tax law stipulates that the business entertainment expenses incurred by enterprises in relation to production and business activities shall be deducted from 60% of the total amount incurred, but the maximum shall not exceed 5 per cent of the sales (business) income of that year. The tax law stipulates that the pre tax deduction for business entertainment expenses should be the beginning of production and operation and the annual sales (business) income. That is to say, the premise of this tax deduction must be sales (business) income, but not in the absence of sales (business) income, only 60% of the amount of business entertainment expenses will be deducted before tax. Therefore, in such a case, the expenses of the nature of business entertainment expenses during the preparation period of enterprises are not allowed to be deducted before tax.

(two) handling of advertising and business publicity fees. Article forty-fourth of the regulations on the implementation of the enterprise income tax law stipulates that the expenses for advertising and business publicity expenses that the enterprise meets shall be deducted from other parts of the sales (business) revenue, except for other provisions of the Department of Finance and taxation of the State Council, which is allowed to be deducted in excess of the part of the sales tax, which is allowed to be deducted in the next tax year. 15% Therefore, if the advertising fees meet the requirements, including the pre tax deduction, including the preparation period, they can be deducted in the next tax year according to the forty-four conditions of the implementation conditions.