Accrual Basis: Inaccurate Understanding Is Liable To Lead To Tax Risks.

Recently, a case of litigation has been encountered, and it is found that many financial and tax leaders of large enterprises have a deviation in the understanding of the accrual basis.

The ninth regulation of the implementation of enterprise income tax stipulates that the calculation of the taxable income of a business is based on accrual basis, and it is the income and expenses of the current period. Whether it is paid or not, it is regarded as the income and expense of the current period. It is not the income and expenses of the current period. Even if the amount has been paid in the current period, it will not be regarded as the income and expense of the current period.

In practice, many people often overlook the exceptions of the regulations on the implementation of enterprise income tax: "this Ordinance and the State Council Finance,

Unless otherwise stipulated by the competent authorities. "

The concept of accrual basis came from the accounting system at first.

In 2006, the accounting standards for enterprises increased the accrual basis to the accounting basis, and served as the measurement basis for the confirmation, measurement and reporting of enterprise accounting, which runs through the whole process of the enterprise accounting standards system.

The basic requirements of accrual basis are exactly the same as those of the enterprise income tax law. This is one of the original intentions of the enterprise income tax law design, that is, to minimize the differences between corporate income tax and accounting.

The accounting basis corresponding to accrual basis is the payment realization system, that is, the cash received or paid as the basis for confirming the income and expenses.

In terms of corporate income tax, there are principles of authenticity, rationality, relevance, certainty and legality, which are related to accrual basis. These are "other provisions" in the ninth regulation of the implementation of enterprise income tax.

In other words,

The principle of taxation is generally based on accrual basis and coexist with other principles.

The eighth section of the enterprise income tax law, "the actual expenses incurred by enterprises in connection with the acquisition of income, including costs, expenses, taxes, losses and other expenditures, are allowed to be deducted when calculating the taxable income amount". This stipulation clearly defines the three basic principles of pre tax deduction, that is, the truth (actually happening), the relevance and the rationality.

For example, an enterprise has borrowed funds from another enterprise, and agreed to pay interest 10 million yuan before December 31, 2015. After the enterprise fails to pay the actual expenses, the enterprise will still charge the financial expenses according to the accrual basis principle, and declare and deduct the enterprise income tax remittance in 2015.

The tax authorities, on the grounds that the expenditure is not actually occurring, require enterprises to increase their corporate income tax.

Where is the basis for the tax authorities? The first section of the thirty-eighth section of the enterprise income tax regulations clearly stipulates: "the following interest expense that the enterprise produces in the operation and operation activities will be deducted."

Please note that interest rates are clearly defined here.

The so-called expenditure is to have actual expenditure action, that is, after the interest is paid, we can talk about the reasonableness and relevance of the pre tax deduction.

Therefore, interest can not be deducted before tax if there is no actual expenditure.

Expand to other deductions before tax, from the implementation regulations, we can see that in many provisions, the relevant pre tax deduction should be "expenditure", "pay", "pay" and "allocate payment".

In fact, in the enterprise income tax law, only a few listed items can be withdrawn, and other deductions must be real.

Therefore, authenticity is the first principle of pre tax deduction, and it is not allowed to deduct pre tax expenses for enterprises that do not actually occur.

This principle has also been verified in the announcement of the State Administration of Taxation on certain issues concerning enterprise income tax (thirty-fourth of the State Administration of Taxation, 2011), which is verified by the fact that the relevant costs and expenses actually occurred in the enterprise during the year, for various reasons, failed to get the valid certificate of the cost and cost in time, and the enterprise is in the sixth place.

The quarterly income tax can be accounted for temporarily according to the book amount, but when the settlement is paid, the effective certificate of the cost and cost should be supplemented. "

In other words, if a valid certificate is not provided at the end of the remittance to prove that the expenditure is actually occurring, the enterprise should increase the taxable income in the year of remittance.

There are many such examples in practice.

A real estate development enterprise has repaired the already delivered housing, and the maintenance cost has been 5 million yuan.

Assuming that the expenditure has actually occurred, the housing is still in the warranty period with the contractor, and the development enterprise and the construction enterprise are having a lawsuit on who will bear the cost of maintenance.

That is to say, whether the maintenance cost of the 5 million yuan is finally borne by the development enterprise is not completely determined; the tax authorities increase the tax payment on the basis of the "unsettled expenses".

This is actually the requirement of certainty principle of enterprise income tax.

This determination is mainly determined by the amount of money.

If the trial finds that part of the cost is not within the scope of the contract warranty, the court decides that the development enterprise will bear some of the expenses, and that part of the cost can be deducted before tax.

The certainty principle is also reflected in the recognition of corporate income tax revenue.

The notice of the State Administration of Taxation on certain issues concerning the recognition of enterprise income tax (National Tax Letter No. 2008] No. 875) has clearly defined four conditions for the sales revenue of goods recognized by enterprises, that is, the commodity sales contract has been signed, and the enterprises have pferred the main risks and rewards related to the ownership of the goods to the buyers. The enterprises have not retained the right to continue the management which is usually associated with the ownership of the goods sold, nor have they implemented effective control; the amount of the income can be reliably measured; the cost of the seller who has occurred or will be incurred can be reliably accounted for.

Compared with the accounting standards for enterprises, there is a shortage: the relevant economic benefits are likely to flow into enterprises.

That is to say, enterprises need to confirm that the possibility of the recovery of the sales price is greater than the possibility of unrecoverable, that is, the likelihood that the sales price of goods will be recovered more than 50% will be recognized as the enterprise income.

This accounting standard is precisely a challenge to the certainty principle of enterprise income tax.

Based on the principle of prudence, accountants make professional judgments through past experience with buyers, government related policies and other aspects, so as to confirm whether economic interests are likely to flow into enterprises, which brings uncertainty to the management of enterprise income tax.

Therefore, the condition of the enterprise income tax on the sales revenue recognition of goods is rejected.

The principle of certainty is also reflected in the fact that no cost is deducted from the cost of the enterprise's advance or estimated liabilities.

Of course, when bad debts are prepared and all kinds of impairment provisions are prepared, the enterprise income tax will compromise with the accounting game, allowing the deduction in certain years according to certain standards, and it is also a return to accrual basis.

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