The Case And Analysis Of Value-Added Tax Planning For Enterprise Merger

Enterprise merger refers to the legal act of merging two or more enterprises into an enterprise according to the stipulations of the law or the contract.

These include the pfer of all assets and liabilities by the merged enterprise to another existing or newly established enterprise (referred to as the merger enterprise), in exchange for the shareholders' equity or other property of the merged enterprise, and the realization of the merger of two or more than two enterprises.

There are two forms of Merger: one is the new merger, that is, the dissolution of the merger parties and the establishment of a new enterprise, also known as dissolution and merger; the other is the merger and absorption, that is, the merger of one party, the dissolution of the other parties and the integration of the remaining parties.

No matter what way the enterprise merges, the liquidation procedure is not required. The shareholders of the enterprises before merging will continue to become shareholders of the merged enterprises except for the withdrawal of shares, and the debts and debts of the enterprises before merger will be inherited by the merged enterprises through the procedures prescribed by law.

The business activities of enterprises before and after merger should be dealt with tax as a continuation of business activities.

With the increasingly fierce market competition, the merger of enterprises will be very frequent.

Because foreign-funded enterprises are often able to enjoy some tax preferences, therefore, in addition to considering the key factors such as investment, production and operation, market demand and so on, we should not ignore the changes in the applicable tax policies arising from the merger.

In particular, the tax treatment involved in enterprise merger is rather complicated, and enterprises should deal with it cautiously.

There are mainly two tax laws for domestic enterprises involving merger: enterprises.

Interim Provisions on certain income tax issues in the Reform [national tax issuance (1998) 97] and "notice on income tax on merger and consolidation of enterprises" [IRS (2000) 119]. Income tax on enterprise merger shall be handled in accordance with the specific way of merger.

(1) under normal circumstances, the merged enterprises should be regarded as pferring and disposing of all assets according to fair value, calculating the pfer of assets and paying income tax according to law.

The losses in the previous year of the merged enterprises shall not be pferred to the merged enterprises to make up for them.

The merged enterprise accepts the assets of the merged enterprise, and when calculating the tax, it can determine the cost according to the value recognized by the appraisal.

(2) when the combined enterprise pays the price of the merged enterprise (shareholder), the treatment of the income tax is different.

That is: in the purchase price paid by the combined enterprise to the merged enterprise or its shareholders, except cash, securities and other assets (hereinafter referred to as non equity payments) other than the shares of the merged company, which is not higher than the 20% of the par value (or the book value of the capital stock) paid by the tax authorities, the parties may choose the following income tax treatments according to the following provisions:

(1) the merged enterprises do not confirm the pfer or loss of all assets, and do not calculate the income tax.

All the enterprise income tax items previously consolidated by the merged enterprises shall be borne by the merged enterprises. If the losses of the previous year do not exceed the statutory compensation period, the combined enterprises shall continue to make up for the income that is related to the assets of the merged enterprises in accordance with the regulations.

(2) the tax cost of merging enterprises to accept all assets of the merged enterprise must be determined on the basis of the original book value of the merged enterprise.

If a merged enterprise is still a foreign-funded enterprise in accordance with the relevant laws, the relevant tax preferences shall be dealt with according to the following provisions:

(1) the regular reduction and exemption preferential treatment shall be applied to the production and business operations of the merged enterprises in line with the preferential application scope of the periodic tax deduction and exemption stipulated in the tax law. The tax treatment before the merger shall be continued. The specific tax treatment shall be carried out according to the following methods:

(1) before the merger, all enterprises should enjoy the preferential tax reduction and exemption tax and enjoy the expiration of the term, and the merged enterprises will no longer enjoy it.

(2) the preferential tax relief granted by the enterprises before the merger shall not enjoy the expiration and the remaining period is the same. The enterprises after the merger shall continue to enjoy the expiration date.

(3) the surplus of enterprises before the merger is regular.

In case of inconsistency or where there is no preferential tax reduction or exemption, the merged enterprise shall calculate the corresponding taxable income according to the following methods.

The corresponding amount of taxable income that is not consistent with the period of remaining tax reduction and exemption shall continue to enjoy preferential treatment until the expiry of the period.

I.

After merging, the enterprises with merger will be divided into corresponding business organizations to continue their production and business operations before merging. The merged enterprises can set up account books separately, and calculate the taxable income of their business organizations accurately and reasonably.

II.

After the merger, the enterprises before merger are not divided into corresponding business organizations, or if they are set up as business organizations, but after the competent tax authorities have determined that the merged enterprises fail to accurately and reasonably calculate the taxable income of their business organizations, the proportion of the total annual taxable income shall be calculated according to the proportion of the annual operating income, the proportion of the cost and the expenses, the proportion of assets, the number of workers or the proportion of wages or the proportion of the various proportions of the various business organizations or business operations that are applicable to different tax treatments in the enterprise.

The proportion of the relevant items involved in the above mentioned proportions is not easy to determine, and the above-mentioned proportion can be determined according to the amount of relevant items in the last complete tax year or other reasonable period before the merger.

(2) the reduction of tax rates should be applied to the merged enterprises and their business organizations according to their actual production and operation conditions, and in accordance with the tax law and the detailed rules for implementation and the relevant provisions, the relevant regional or industrial tax reduction rates shall be determined, and the taxable income corresponding to the corresponding taxable amount shall be calculated according to the above provisions.

(3) dealing with previous losses, the business losses that have not been made up by the enterprises before the merger can be made up by the merged enterprises year after year in the remaining period of the statutory loss compensation period.

If a merged enterprise has a business organization in areas where different tax rates apply, or both production and business operations that apply different tax rates or different periods of tax reduction and exemption, the corresponding amount of income shall be calculated according to the provisions of the above (1) (2).

The above operating losses of the enterprises before the merger should be made up in the same tax treatment as the enterprises before the merger. They should be implemented in accordance with the provisions of the ninety-first articles and second paragraphs of the detailed rules for the implementation of the income tax law of foreign invested enterprises and foreign enterprises.

A business organization that has incurred losses should make up for its losses after the profit of the business organization in the following years and make profits after making up for the losses, and then pay taxes according to the tax rate applicable to the business organization. The amount of compensation should be paid according to the tax rate applicable to the business organizations that have lost the business of the loss making business.

[case notes] there are two joint ventures in the company. Because they are in the upstream and downstream parts of the production process of enterprises, in order to expand production and achieve mutual benefit, the two enterprises are ready to merge into one enterprise after consultation.

A company is in a period of half of the income tax levy, and B is in a loss period.

[answer] how is the business?

Advantageous?

According to the above regulations, enterprises should consider comprehensively: whether we should adopt new merger or merger.

Because there is a tax concession period for an enterprise, and another enterprise is losing money, it involves the problem of continuing to enjoy preferential tax policies and make up for losses. According to which way to deal with the problem, it is necessary to measure the situation with regard to the situation of enterprises.

[case description] the Yangzhou machinery Limited by Share Ltd, merged with the loss of state-owned enterprises in September 2002, Gaoyou Xinmin motor factory.

When the Gaoyou Xinmin Motor Factory merged, the book net assets amounted to 5 million yuan, and the loss in 2001 was 1 million yuan (no loss in the previous year). The value of the assessment confirmed was 5 million 500 thousand yuan. After consultations between the two sides, Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd can merge Gaoyou Xinmin motor factory in the following ways.

The stock market price of the combination of Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd is 3.1 yuan / share.

Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd has issued 20 million shares (1 yuan / share).

(1) Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd purchases Gaoyou Xinmin motor factory with 18 million shares and 100 thousand yuan RMB, [Li Tenuo (Yangzhou) machinery Limited by Share Ltd stock market price is 3 yuan / share];

(2) Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd purchased Gaoyou Xinmin motor factory with 1 million 500 thousand shares and 1 million yuan RMB.

It is assumed that the shareholding of the merged company's shareholders in the merged enterprise will not change after the year. The amount of taxable income that the combined enterprise will not make up for each year is 9 million yuan, the average depreciation age of the assets after appreciation is 5 years, and the average profit rate of the industry is 10%.

The income tax rate is 33%.

[request answer] what kind of plan should be chosen by the Yangzhou machinery Limited by Share Ltd?

[comparative analysis] from the point of view of the mechanical Limited by Share Ltd of Li Tek Nuo (Yangzhou): the first option involves the following tax issues when merging: the non equity payment amount (100 thousand yuan) is less than the 20% of the equity (20% yuan), so the Gaoyou Xinmin Motor Factory does not pay the income tax on the pfer proceeds; the loss of Gaoyou Xinmin motor factory in 2001 can be made up by Leigh Taco Nor (Yangzhou) machinery Limited by Share Ltd, and Li teknuo (Yangzhou) machinery Limited by Share Ltd can make up the 1 million yuan loss of Gaoyou Xinmin motor factory in the first and second years.

When the tycoon (Yangzhou) machinery Limited by Share Ltd accepts the assets of Gaoyou Xinmin motor works, it can take the original account value of Gaoyou Xinmin motor factory as the basis of the assets tax cost.

Secondly, how much dividends will be paid to the 18 million Limited by Share Ltd of Yangzhou Xinmin electric machinery factory? What is the dividend payable in the first year or second years of the first year and the second year of the mechanical Limited by Share Ltd in Gaoyou?

900 x (1-33%) +79.84 x 33%=629.34 (10000 yuan).

The dividend payable is: 629.34 x (1-25%) =472.01 (10000 yuan), of which 10% is statutory surplus reserve, 5% is social welfare fund, and 10% is any surplus surplus.

The dividend discount rate paid to shareholders of Gaoyou Xinmin motor factory is: 180 * 2000 x 472.01 x 0.909=38.62 (10000 yuan).

In the same way, the dividend discount value of the second year of the Yangzhou machinery Limited by Share Ltd paid to the Xinmin motor factory in Gaoyou was 340 thousand yuan; the dividend paid by the shareholders of the machinery company Limited by Share Ltd in the next year to Gaoyou Xinmin motor factory was calculated according to the profit margin rate of 10%, and the discount value was 180 0.8264=336.37 2000 x (900 x 67%) x (1-25%) 10% x 0.8264=336.37 (10000 yuan).

Therefore, in the first way, the cash outflow discounted value of Yangzhou's machinery Limited by Share Ltd combined with Gaoyou Xinmin motor factory is: 10+38.62+34+336.36=418.98 million yuan (2) option, because the non equity payment amount (1 million yuan) is greater than that of the stock rights (20% yuan (300 thousand yuan)), therefore, the merger should pay income tax on the pfer income, the income tax payable is: (1800 x 3+10-500) x 33%=16.5 million.

After the merger, the Xinmin motor factory in Gaoyou no longer exists, and this part of the income tax is actually borne by the combined enterprise, Limited by Share Ltd (Limited by Share Ltd).

The loss of Gaoyou Xinmin motor factory in 2001 can not be made up by liti Ke Nuo (Yangzhou) machinery Limited by Share Ltd.

Because livernov (Yangzhou) machinery Limited by Share Ltd can use the value of value added assets as the taxable price. The value added part can reduce the income tax every year in the depreciation period: (550-500) 5 x 33%=3.3 (10000 yuan).

The profit after tax of the first year of Li Tech (Yangzhou) machinery Limited by Share Ltd is 900 x (1-33%) +3.3-16.5=589.8 (10000 yuan).

According to the calculation method of the first plan, the first dividend payment of the letycnov (Yangzhou) machinery Limited by Share Ltd to shareholders of the Gaoyou Xinmin motor works company is 301 thousand and 600 yuan, and the dividend discount to shareholders of Gaoyou Xinmin motor factory from second to fifth years is 893 thousand and 300 yuan.

Li Tek Nuo (Yangzhou) machinery Limited by Share Ltd will pay dividends to shareholders of Gaoyou Xinmin motor factory for 2 million 106 thousand yuan in the following year.

Therefore, under the second ways, the cash outflow discounted value of Yangzhou's machinery and Limited by Share Ltd merged with Gaoyou Xinmin motor factory is 16.5+100+30.16+89.33+210.60=446.59 million yuan.

Comparing the two options, the first plan has a smaller cash outflow, so the first plan should be adopted by the Yangzhou Limited by Share Ltd.

[special note] from the example analysis, we can see that tax planning must take account of the changes of tax and cash flow brought about by changes in business activities.

In this case, due to the combination of the Yangzhou machinery Limited by Share Ltd and the Gaoyou Xinmin electric machinery factory, not only should we consider the company of Limited by Share Ltd (Yangzhou) mechanical Limited by Share Ltd to pay the cash price of shareholders of Gaoyou Xinmin motor factory when merging, but also consider that because the shareholders of Gaoyou Xinmin electric plant also own the shares of mechanical Limited by Share Ltd, Li Tekno (Yangzhou) machinery Limited by Share Ltd will pay dividends to the shareholders of Gaoyou Xinmin motor factory every year.

Due to the different payment methods of the merged enterprises to the merged enterprises, it will lead to different ways to deal with the income tax, whether it involves whether the merged enterprises can make up the tax on the pfer proceeds, whether the losses can be made up, the dividends paid by the merged enterprises to the merged enterprises, and the depreciation of the value added assets.

Therefore, it is not in any case that the merger of non equity payments is no more than the 20% of the par value paid.

We should consider the factors that can make up the size of the loss and the profit rate of the industry. In the above example, if these factors change, the second option is likely to be cost-effective.

In actual operation, we should make specific calculations. The above examples only provide ideas and methods for planning.

In terms of turnover tax, through the value-added tax input tax of the inventory of the annexed enterprises, the output tax of the merged enterprises will be deducted, and the tax burden of the added value tax will be reduced after the merger.

[case description] the company sells 5 million yuan in August 2002, the tax amount is 850 thousand yuan, and the tax in August is 500 thousand yuan, and the actual value added tax is 350 thousand yuan.

[analysis and explanation] in August 2002, the company was merged with Ganyu Hongxing garment factory. The assets of Hongxing garment factory in Ganyu were equal to the liabilities, that is, the net assets were zero. Therefore, the "zero price acquisition" method was adopted. The Red Star garment factory in Ganyu had 1 million yuan in stock and the corresponding input tax was 170 thousand yuan.

From the perspective of cash flow, after the merger, the company's value added tax was reduced to 180 thousand yuan in the current period, mainly due to the tax on the stock of Ganyu Hongxing garment factory.

For more information, please pay attention to the world clothing shoes and hats and Internet cafes.