Differences Between Subsidiaries And Subsidiaries In Tax Treatment

According to the fourteenth provision of the company law of the People's Republic of China (No. forty-second of the president of the People's Republic of China), "a company can set up a branch."

The establishment of a branch shall apply to the company registration authority for registration and obtain a business license.

A branch does not have a legal person qualification, and its civil liability is borne by the company. "

"A company can set up a subsidiary company with a legal person qualification and independently bear civil liability in accordance with the law".

Thus, they are quite different in the legal status of the subjects.

1, the subsidiary company is an independent legal person in law, and independently assumes civil liability according to law, that is, carrying out all kinds of civil and economic activities in its own name, and independently undertaking all consequences and responsibilities brought by the company's actions.

2, the branch is not an independent legal person in law, and does not have the qualification to bear civil liability independently. That is to say, it belongs to a branch of the head office and is not an independent individual.

1. Subsidiary:

The general performance of parent company and subsidiary is the relationship between share control and control. It may be wholly owned or controlled by the largest shareholder.

Subsidiaries are governed and controlled by their parent companies in terms of economy and decision-making, but in law, subsidiaries are independent legal persons.

A subsidiary has its own name and articles of Association; it has an independent organization and an independent property.

Subsidiaries carry out independent accounting and self financing.

2. Branch:

Generally speaking, the relationship between the head office and the branch is the relationship between the head office and the branch, and has the subordinate characteristics.

In essence, a branch is a branch office of a head office located in a remote location.

Branches are generally not fully independent accounting units, profit and loss is only a performance appraisal.

A subsidiary can set up a branch, but a branch cannot have a subsidiary.

Three. Differences in tax treatment

(1) handling of subsidiaries

As an independent legal entity, a subsidiary is an independent taxpayer with independent accounting and independent declaration and tax payment.

(two) processing of branch offices

As a branch of a branch, the branch applies the relevant policies of the total sub agency.

The general organs and branches shall handle tax registration according to law and accept the supervision and management of the competent tax authorities at the locality.

1, corporate income tax

(1) according to the State Administration of Taxation's issuance of "cross regional business summary"

The notice on the collection and management of enterprise income tax "," Announcement No. fifty-seventh of the State Administration of Taxation "2012 (hereinafter referred to as" general tax Announcement No. 57 of 2012 "), stipulates that the resident enterprises shall establish a branch without legal person qualification within the territory of China (referring to provinces, autonomous regions, municipalities directly under the central government and cities under separate planning), and the resident enterprise shall collect tax enterprises across regions (hereinafter referred to as" summary tax paying enterprises ").

The enterprise income tax collection and management measures shall be implemented by aggregated tax payment enterprises on the basis of "unified calculation, hierarchical management, pre paid in place, aggregate liquidation, and fiscal adjustment".

The enterprise income tax aggregated by the tax payment enterprises in accordance with the provisions of the enterprise income tax law, including the prepaid tax and the repayable tax payable, shall be apportioned between the various branches, and the branches shall pay the library in accordance with the assessed tax, or 50% of the total amount paid by the general authority, of which 25% shall be paid or refunded on the spot, and 25% shall be paid in full to the central treasury or to the repository on the spot in 25%.

(2) for the unincorporated branches in production and operation under the name of the general organization, it is impossible to provide the income tax distribution form of the branches of the aggregate tax payment enterprises, nor to provide the relevant evidence of the twenty-third provision of the "total tax Announcement No. 57 2012".

(3) according to the notice of the Zhejiang Provincial Local Taxation Bureau on Zhejiang Province Local Taxation Bureau on the collection and payment of enterprise income tax administration in the province, the Zhejiang Provincial State Taxation Bureau, Zhejiang Province Local Taxation Bureau Announcement No. third of 2013 stipulates that the calculation of the enterprise income tax in the Zhejiang Province, the prepayment, and the settlement and settlement of the enterprise income tax shall be implemented according to the "57 announcement of the total tax 2012".

Therefore, the branch of the enterprise income tax management: those that meet the specified conditions, pay taxes in advance, collect and liquidate in advance, fail to provide the income tax distribution form of the branches of the tax collection enterprises, and fail to prove that the branch enterprises pay the enterprise income tax on the spot in accordance with the independent tax payers; the branch companies carry out independent accounting and do not collect taxes, and pay the enterprise income tax in accordance with the independent taxpayer.

The subordinate two branches of listed enterprises should submit the prepaid statements or other relevant information to the local competent tax authorities in accordance with the relevant provisions of the enterprise income tax, but the tax shall be paid to the competent tax authorities where the head office is located.

Such as: "the State Administration of Taxation on the Industrial Commercial Bank of China Ltd and other enterprise income tax related issues of tax collection and notification" (National Tax Letter No. [2010]184) listed enterprises.

2, value-added tax

(1) the tax payment place of the value-added tax of the branch, which is part of a branch, to facilitate the docking with the documents, hereinafter referred to as the branch, for the sale of goods and the provision of processing and repairing services.

According to the twenty-second provision of the Provisional Regulations of the People's Republic of China on value added tax, fixed businesses shall declare and pay taxes to the competent tax authorities where their institutions are located.

Where a general organ or branch is not in the same county or municipality, it shall declare and pay taxes separately to the competent tax authorities of their respective locality.

Therefore, the value-added tax of branches is generally declared and paid in place.

However, the article also stipulates that by the approval of the Department of Finance and taxation of the State Council or the authorized financial and tax authorities, the general organ may report to the competent tax authorities where the head office is located.

The notice of the Ministry of Finance and the State Administration of Taxation on the policy of collecting and paying taxes on value added tax of fixed branches of general branches (Finance and taxation [2012]9) further clarified the above provisions: the general branches of fixed businesses are not in the same county (city), but within the same province (district or city), the provincial authorities (bureaux) and the state taxation bureaus can approve and submit the vat by the head office to the competent tax authorities at the locality where the head office is located.

The provincial (District, municipal) financial offices and the state taxation bureaus shall report the results of the examination and approval to the Ministry of Finance and the State Administration of Taxation for the record.

In actual work, the value added tax is consolidated by the head office and the unified declaration and payment is mainly the chain operation enterprises.

For example, the third circular of the Zhejiang State Administration of Taxation on the issue of tax collection and payment of value added tax in chain operation enterprises (article [2005]76 of Zhejiang tax revenue) stipulates that "the total chain stores that have approved the payment of value-added tax shall pay the total value added tax payable to the local competent state tax authorities in the same month, that is, the total value added tax should be added to the head office: all the total sales tax, the total tax rate of the stores, and the value added tax of the stores should be zero."

Therefore, the aggregate payment of VAT needs the unified accounting of the head office, and the branch's independent accounting can not be aggregated and paid.

(2) the pfer of goods between the total branches of unified accounting is regarded as a special provision for sale.

First, the relevant provisions should be collected:

(1) the fourth rule of implementing the Provisional Regulations of value added tax is regarded as item 3 of the sale of goods: taxpayers who have more than two institutions and carry out unified accounting shall pfer goods from one organization to other organizations for sale, except that the relevant institutions are located in the same county (city).

(2) the Circular of the State Administration of Taxation on the issue of VAT levied on the pfer of goods between enterprises by the State Administration of Taxation ([1998]137) stipulates that the sale of goods referred to in article fourth (3) of the detailed rules of implementation refers to the operation of one of the following situations: receiving invoices to the purchaser and collecting goods from purchasers.

If there is one of the two cases mentioned above, the value added tax shall be paid to the local tax authorities. If the above two situations are not observed, the value added tax shall be paid uniformly by the head office.

If the consignee institution only invoices or receives payment for part of the goods to the purchaser, it shall calculate the difference and pay taxes to the location of the head office or the branch office separately.

(3) the Circular of the State Administration of Taxation on the issue of the place where taxpayers pay taxes on value added tax on net payment by means of fund settlement network ([2002]802) stipulates that taxpayers shall open accounts in various places in the name of the general agency, collect goods from all over the country through the capital settlement network, and invoke the invoices directly from the head office to the purchasers, and do not have one of two situations that the State Administration of Taxation has issued the notice of the State Administration of Taxation on the issue of the value added tax on the pfer of goods between enterprises, and the receipt of the goods to the Buyer shall be one of the two cases. The taxable income shall be VAT payable at the place where the head office is located.

From the beginning, it is difficult to understand the pfer of goods between the taxpayers in the unified accounting system and the sale of the three documents.

In the implementation of a unified accounting system, the total agencies of the taxpayers shall pfer the goods to the branch offices. If the branch branches invoke the local invoices of the branches to the buyers or collect the goods from the buyers when the goods pferred to the outside market are sold, as long as one of the two conditions is satisfied, the vat of the sale of these goods needs to pay taxes at the place where the branches are located.

In the event of the pfer of goods, the head office needs to be regarded as a sales person, and the special invoices are issued to the branches for deduction.

However, if the general institutions receive unified collection and unified Invoicing, the sale of these goods should be paid at the location of the head office.

(3) the VAT provision of the taxpayer's general body of the camp changed to increase (i.e. taxable services).

According to the Circular of the Ministry of Finance and the State Administration of Taxation on reissuing the Interim Measures for the calculation and payment of value added tax of taxpayers in the pilot institutions of general organs (fiscal and taxation [2013]74), the taxpayers and their branches of the general organs approved by the Ministry of Finance and the State Administration of taxation can collect and calculate the declaration and payment of value-added tax according to this method.

When the total tax and tax revenue of the taxpayers and their branches are aggregated to declare and pay VAT, only the taxable service items will be aggregated, and the total and branch offices will sell the goods, provide processing, repair and repair services, and declare VAT in accordance with the provisional regulations and relevant regulations of VAT.

The head office shall collect the VAT payable on the taxable service business of the total sub unit, and reduce the value added tax payable by the branches to the taxable service business, and declare the VAT at the location of the head office.

Taxable services are generated by branches, and value-added tax is calculated according to the sales volume and the rate of levy.

The formula is as follows:

VAT payable: value added tax sales volume * pretax rate

The rate of levy shall be stipulated by the Ministry of Finance and the State Administration of Taxation, and shall be adjusted at the right time.

In short, a subsidiary is an independent taxpayer and a complete taxpayer.

The branch is subordinate to the head office. Under normal circumstances, it is an independent taxpayer to declare and pay taxes independently on the basis of the territorial principle of value added tax. However, after verification and confirmation, it can also be aggregated and paid. In addition, the service portion of the business tax increase and taxable service needs to be paid in advance according to the pretax rate; on the income tax, the independent accounting is used as an independent taxpayer to declare and pay taxes in place, and the unified accounting is governed by the "unified calculation, hierarchical management, pre paid in place, summary liquidation and fiscal adjustment".

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