Tax Regulations: Individual Non Monetary Assets Investment Can Be Paid By Installments.

The eighty-third executive meeting of the State Council has made it clear that the actual proceeds from the investment of non monetary assets such as equity, real estate and technological inventions will be extended to the whole country through the one-off tax to phased tax policy.

In order to encourage and guide private investment and implement the decision of the State Council on the phased payment of personal income tax on non monetary assets investment, the State Administration of Taxation jointly issued the Circular of the Ministry of Finance on the personal income tax policy on personal non monetary assets investment (Ministry of Finance) issued by the Ministry of Finance (fiscal 2015 [41]), and recently issued the notice of the State Administration of Taxation on the regulation of personal income tax on non monetary assets investment (Twentieth 2015, hereinafter referred to as the "announcement"). Since April 1, 2015, it has explicitly implemented the individual income tax on non monetary investments.

It is reported that the "notice" clearly defined the tax payment sites, related pfer factors, confirmation procedures, filing procedures, etc., which further ensured the implementation of the policy, standardized the implementation of the operation, simplified the process of tax administration, and safeguarded the rights and interests of taxpayers.

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What are the procedures for planning and filing?

Taxpayers need to make the installment tax plan within 15 months of the acquisition of the equity of the invested enterprise, and make the installment tax filing procedures to the competent tax authorities. During the period of tax payment, the taxpayer's installment tax plan needs to be changed and adjusted, and the filing procedures should be re worked with the competent tax authorities.

The investment in non monetary assets before April 1, 2015 will not exceed 5 years, and has not yet been processed for tax purposes, and the individual income tax needs to be paid in installments. Taxpayers shall, within 30 days from the date of this announcement, handle the filing procedures for the phased tax filing with the competent tax authorities.

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What are the obligations?

The invested enterprises should also report the change of the taxpayers' equity during the period when the taxpayer invested in the non monetary assets into the enterprise to obtain equity and the period of tax payment, and report to the competent tax authorities within 15 days after the occurrence of the relevant matters.

How to determine the tax location of individual non monetary investment?

According to the "notice", taxpayers who invest in real estate shall be the local tax authorities at the place where the real estate is located. The taxpayers of the enterprises whose shares are held in foreign investment shall be the tax authorities at the place where the enterprises are located.

For taxpayers who invest in other non monetary assets, the local tax authorities at the location of the invested enterprises shall be in charge.

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What are the original values and reasonable taxes and fees of non monetary assets?

The original value of non monetary assets is recognized at historical cost.

The taxpayer can not provide relevant proof materials, and can not accurately calculate the original value. The competent tax authorities can check it according to law.

A reasonable tax and fee refers to the tax related to the pfer of non monetary assets and the related reasonable expenses incurred in the process of investment in non monetary assets.

Allowable deductions must be related to investments in non monetary assets and are reasonable.

In addition, in the case of equity investment, the confirmation of the original value of shares shall be dealt with in accordance with the relevant provisions of individual income tax on equity pfer.