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Q:
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Is it necessary to file asset loss as deduction before enterprise income tax?
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A:
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According to a Notice by the State Taxation Administration of Enterprise Income Tax Deduction by Asset loss Documentation (STA [2018] No.15), enterprises are required to file deduction by Asset loss and Taxation Adjustment Details Form only if they wish to file asset loss. Other documents about asset loss are no longer required. However, enterprises should store these documents in case for further inspection.
Enterprises should ensure these self-preserved documents are authentic and legitimate.
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Q:
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Does enterprise income tax applicable to government subsidies received?
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A:
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According to a Notice by the Ministry of Finance and State Taxation Administration about Enterprise Income from Special Purposed Fiscal fund related EIT Issues (MoF & STA [2011] No.70), enterprise income from county or above level government or their departments’ special purposed fiscal funds that forms gross income, can be excluded in EIT taxable income once met the following conditions:
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1.
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Document about special purposed fiscal funds;
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2.
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There is special regulations or administration rules on the special purposed fiscal funds grant to enterprises;
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3.
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Enterprises accounts the expenditures of the special purposed fiscal funds received independently.
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Q:
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Is EIT applicable to VAT additional credit deducted parts?
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A:
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According to Enterprise Income Law of People’s Republic of China Article 6, the gross income of an enterprise should include monetary and non-monetary income generated from all kinds of sources.
Meantime, according to a Notice by the MoF and STA about Enterprise Income from Special Purposed Fiscal fund related EIT Issues (MoF & STA [2011] No.70), enterprise income from county or above level government or their departments as special purposed fiscal funds that forms gross income, can be excluded in EIT taxable income once met certain conditions.
Therefore, if the VAT additional deducted parts fail to meet the conditions of non-taxable income, EIT would be applicable.
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Q:
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Would it subject to taxable adjustment if an invoice is issued in December 2020 however reimbursed in January 2021?
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A:
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According to Enterprise Income Tax Law of PRC Article 9, the EIT taxable amount should be accounted on accrual basis. Income and expenses occurred in a period should be record in the period, regardless of actual receival or payment, and vice versa. Unless there is any special regulations by the State Council, MoF or STA applicable.
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Q:
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Is EIT deductible for the donation made to public schools?
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A:
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According to a Notice by MoF and STA Income Deduction before EIT as public welfare donation (MoF & STA [2018] No.15), “with accordance to Enterprise Income Tax Law of People’s Republic of China and Enterprise Income Tax Implementation Regulations of PRC the public welfare donation deduction before EIT specifies:
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1. Donations made by enterprises to charitable events and public welfare business through public welfare social organisations or government and its directly supervised departments at county or above levels, is allowed to be deducted before enterprise income tax calculation for the part within 12% of annual net income.
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The above public welfare social organisation is subject to legitimate public welfare donation deductible before EIT qualification.
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The above annual gross income refers to positive amounts of national accounting standardised computation enterprises.
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Therefore, if the donation is made to public schools directly by enterprises, it should be deducted before EIT.
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FAQ
