Announcement of the State Administration of Taxation on Issues Concerning the Collection and Management of Corporate Income Tax for Corporate Restructuring

 

Announcement of the State Administration of Taxation No. 48 of 2015

 

According to the "People's Republic of China Enterprise Income Tax Law" and its implementing regulations, the "People's Republic of China Tax Collection Management Law" and its implementing rules, the "State Council's Decision on Cancelling the Examination and Approval of Non-Administrative Licenses" (Guo Fa [2015] No. 27), Notice of the Ministry of Finance and the State Administration of Taxation on Several Issues Concerning the Handling of Corporate Income Tax for Corporate Reorganization Business (Caishui [2009] No. 59) and the Notice of the State Administration of Taxation of the Ministry of Finance on Issues Concerning the Treatment of Corporate Income Tax for Promoting Corporate Reorganization (Finance and Taxation [2014] No. 109) and other relevant regulations, the following issues on corporate income tax collection and management of corporate restructuring are announced as follows:

 

1. According to the type of reorganization, the parties to a corporate reorganization are:

 

(1) The parties in debt restructuring refer to the debtor and creditors.

 

(2) The parties in the equity acquisition refer to the acquirer, the transferor and the acquired enterprise.

 

(3) The parties involved in the asset acquisition refer to the acquirer and transferor.

 

(4) The parties to the merger refer to the merged enterprise, the merged enterprise and the shareholders of the merged enterprise.

 

(5) The parties to the division refer to the divided enterprise, the divided enterprise, and the shareholders of the divided enterprise.

 

In the above reorganization transaction, the transferor in the equity acquisition, the shareholder of the merged enterprise during the merger, and the shareholder of the separated enterprise during the division may be natural persons.

 

The natural persons among the parties shall conduct tax treatment in accordance with the relevant provisions of personal income tax.

 

Second, the companies involved in the reorganization are subject to special tax treatment (referring to those in which the restructuring business meets the conditions specified in Articles 1 and 2 of Caishui [2009] 59 and Caishui [2014] No. 109 and selects special tax treatment , The same below), the restructuring leader should be determined as follows:

 

(1) Debt restructuring, the leading party is the debtor.

 

(2) Equity acquisition, the leading party is the equity transferor, involving two or more equity transferors, and the party that transfers the largest proportion of the equity of the acquired enterprise is the dominant party (the leading party can be negotiated to determine the same proportion of transferred equity).

 

(3) Asset acquisition, the leading party is the asset transferor.

 

(4) In the case of merger, the leading party is the merged enterprise, and if multiple merged enterprises are under the same control, the party with the largest net assets shall be the dominant party.

 

(5) Separation, the leading party is the separated enterprise.

 

3. The year when the restructuring business mentioned in Article 11 of Caishui [2009] No. 59 was completed refers to the tax year of the corporate income tax to which the reorganization date belongs.

 

The determination of the corporate reorganization date shall be handled in accordance with the following provisions:

 

1. Debt restructuring, the effective date of the debt restructuring contract (agreement) or court ruling is the restructuring date.

 

2. Equity acquisition, with the transfer contract (agreement) taking effect and the completion of equity change procedures as the reorganization date. If a share purchase occurs between affiliated companies and the equity change procedure has not been completed within 12 months after the transfer contract (agreement) becomes effective, the effective date of the transfer contract (agreement) shall be the reorganization date.

 

3. The acquisition of assets is based on the date on which the transfer contract (agreement) becomes effective and the parties have performed accounting for the reorganization date.

 

4. Merger, with the merger contract (agreement) taking effect, the parties having carried out accounting treatment, and the date of completion of the new business registration or change of registration as the reorganization date. According to the regulations, it is not necessary to handle the merger of new establishment or change of industry and commerce. The date on which the merger contract (agreement) becomes effective and the parties have been accounted for is the reorganization date.

 

5. For division, the reorganization date shall be the date on which the division contract (agreement) becomes effective, the parties have performed accounting treatment, and completed the registration of new establishment or change of industry and commerce.

 

4. Where special tax treatment is applicable to corporate reorganization business, except for cases where other legal forms of the enterprise referred to in Article 4 (1) of Caishui [2009] 59 have simply changed, the parties to the reorganization shall be in the year when the reorganization business is completed When applying for the annual corporate income tax declaration, submit the Report Form and Attachment to the Special Tax Treatment of Corporate Restructuring Income Tax to the respective competent tax authorities and the application materials. If a party involved in the merger or division reorganizes involves cancellation, it shall make a declaration before the cancellation of tax registration procedures.

 

After the restructuring of the leading party's declaration, other parties will apply for tax declaration to its competent tax authority. The declaration should also be accompanied by the "Reorganization Income Tax Special Tax Treatment Report Form and Attachment Form" (copies) accepted by the restructuring leader and accepted by the competent tax authority.

 

5. Where special tax treatment is applicable to the corporate reorganization business, it shall be stated in the following aspects that the corporate reorganization has a reasonable commercial purpose when reporting:

 

(1) Ways of restructuring transactions;

 

(2) the substantial results of the reorganization transaction;

 

(3) changes in the tax conditions involved in the restructuring parties;

 

(4) changes in financial conditions involved in the restructuring parties;

 

(5) Participation of non-resident enterprises in reorganization activities.

 

6. Where special tax treatment is applicable to the corporate reorganization business, the parties should also submit to the competent tax authority an explanation of whether there are other equity and asset transactions related to the reorganization within 12 months before the reorganization, and Explain whether these transactions and the reorganization constitute step-by-step transactions and whether they are handled as a corporate reorganization business.

 

7. According to Article 10 of Caishui [2009] No. 59, if the same restructuring business involves step-by-step transactions within 12 consecutive months and spans two tax years, the parties will complete the transaction in the first tax year. It is expected that the entire transaction meets the special tax treatment conditions. If the special tax treatment is selected through consensus, the special tax treatment may be temporarily applied, and written submissions will be submitted during the annual corporate income tax annual declaration.

 

After the completion of all transactions in the next tax year, the enterprise shall determine whether special tax treatment is applicable. If special tax treatment is applicable, the parties shall report relevant information in accordance with the requirements of this announcement; if general tax treatment is applicable, the annual tax return of the corporate income tax for the corresponding tax year shall be adjusted to calculate and pay the corporate income tax.

 

8. The debt restructuring stipulated in Article 6 (1) of the document Caishui [2009] No. 59 of the enterprise shall accurately record the debt restructuring income that shall be confirmed, and shall confirm it in the current year when the corporate income tax is calculated and paid in the corresponding year The amount and the annual carry-over amount are explained.

 

The competent tax authority should establish a ledger, compare and analyze the debt restructuring income declared by the enterprise with the ledger each year, and strengthen follow-up management.

 

IX. For the reorganization stipulated in Article 7 (3) of the document Caishui [2009] No. 59 of the enterprise, the resident enterprise shall accurately record the total amount of assets or equity transfer gains that shall be confirmed, and shall settle and pay the enterprise income tax in the corresponding year. At that time, the situation of the confirmed amount and the carry-over amount in each year will be explained.

 

The competent tax authority should establish a ledger to compare and analyze the tax base of the equity acquired by a resident enterprise and the annual recognition of assets or equity transfer income, and strengthen subsequent management.

 

X. For enterprises applying special tax treatment, when transferring or disposing of reorganized assets (equity) in subsequent years, they shall make a special explanation on the income or loss of asset (equity) transfer in the annual tax declaration, including the determination during the special tax treatment. Comparison of the tax base of the reorganized assets (equity) with the tax base at the time of transfer or disposal, and the treatment of deferred income tax liabilities.

 

For enterprises that apply special tax treatment, when transferring or disposing of restructured assets (equity) in subsequent years, the competent tax authority should strengthen evaluation and inspection, and transfer the tax basis of the restructured assets (equity) determined during the special tax treatment of the enterprise to the transfer or disposal of Comparison of tax calculation basis and related annual tax return at the time of disposal. If any problem is found, it shall be adjusted according to law.

 

Eleventh, the taxation authority shall do a good job of archiving statistics and related materials for the reorganization of enterprises applying special tax treatment. Provinces, autonomous regions, municipalities directly under the Central Government, and cities with separate plans shall submit the "Statistical Table of Special Tax Treatment of Corporate Restructuring Income Tax" to the State Administration of Taxation (Income Tax Division) before the end of August each year.

 

XII. This announcement applies to the settlement and settlement of corporate income tax in 2015 and subsequent years. Announcement of the State Administration of Taxation on Promulgating the Measures for the Administration of Enterprise Income Taxes on Enterprise Reorganization Business (State Administration of Taxation Announcement No. 4 of 2010) Articles 3, 7, 8, 8, 16 and 17 Article 18, Article 22, Article 23, Article 24, Article 25, Article 27, and Article 32 shall be repealed simultaneously.

 

When this announcement comes into effect, the enterprise has signed a reorganization agreement, but the reorganization has not been completed, it shall be implemented in accordance with this announcement.

 

Special announcement.

 

State Administration of Taxation

 

June 24, 2015