Kong Lingwen's annual corporate income tax calculation is an "annual summary" of a series of matters such as the taxpayer's taxable income, pre-tax deductible items, investment income, gains and losses, enjoyment of tax preferences, and adjustments to deferred items in previous y

Kong Lingwen

The annual corporate income tax return is an "annual summary" of a series of matters such as the taxpayer's taxable income, pre-tax deductible items, investment income, gains and losses, tax preferential enjoyment, and adjustments to deferred matters in previous years for a tax year. Regardless of the size of the taxpayer and whether it is profitable or not, annual accounting is a very important task and requires preparation in advance. Generally speaking, the more complete the prerequisite preparations, the more guaranteed the quality of the financial statements.

Drawing: Feng Yue Zhou Tao

Unconsciously, the last month of 2022 has passed halfway. For those in charge of corporate finance and taxation, this means that the annual corporate income tax annual settlement has entered the preparation stage. The annual corporate income tax return is an "annual summary" of a series of matters such as the taxpayer's taxable income, pre-tax deductible items, investment income, gains and losses, enjoyment of tax preferences, and adjustments to deferred items in previous years for a tax year. Regardless of the size of the taxpayer and whether it is profitable or not, annual accounting is a very important task. From a practical point of view, if the calculation lead time is sufficient, the post-processing will be more relaxed.

1

Sort out the annual policies and grasp the key details

In accordance with the decisions and arrangements of the Party Central Committee and the State Council, the finance and taxation departments will issue some new policies on corporate income tax every year, and these new policies will affect the annual corporate income tax calculation results of some taxpayers to varying degrees. When taxpayers are preparing for corporate income tax final settlement, they need to sort out the new policies related to their own production and operations based on the industry of the enterprise, nature of income, pre-tax deduction methods, taxable income, tax declaration and many other aspects, comprehensively consider the impact of the new policies on the final settlement results, and handle them properly during the final settlement period.

Countries promulgate many corporate income tax policies every year, some of which are applicable to specific targets, some of which are universal, and some require professional judgment to know whether they are relevant to the enterprise. For example, the “Announcement of the Ministry of Finance and the State Administration of Taxation on Preferential Tax Policies for Enterprises’ Investment in Basic Research” (Ministry of Finance State Administration of Taxation Announcement No. 32 of 2022 (hereinafter referred to as "Announcement No. 32") clarifies that expenditures made by enterprises for basic research to non-profit scientific and technological research and development institutions (hereinafter referred to as "non-profit scientific research institutions"), universities and government natural science funds can be deducted before tax based on the actual amount when calculating taxable income , and can be deducted at 100% on a pre-tax basis. At the same time, non-profit scientific research institutions and colleges and universities receiving basic research funds from enterprises, individuals and other organizations are exempt from corporate income tax. Whether taxpayers are eligible for Announcement No. 32 needs to make targeted professional judgments based on carefully studying the original text of the announcement and combining it with the "Operation Guidelines for Enterprise Investment Basic Research on Preferential Tax Policies" issued by the State Administration of Taxation. Otherwise, in the subsequent accounting stage, you are likely to encounter obstacles in understanding and application, which will affect the accounting process. In the process of sorting out annual policies,

should pay special attention to some "retrospective" policies. For example, the "Announcement of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology on Further Increasing the Pre-tax Super Deduction Ratio of R&D Expenses for Small and Medium-sized Scientific and Technological Enterprises" (Announcement No. 16 of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology of 2022), and the "Announcement of the State Administration of Taxation on Matters Concerning Preferential Prepayment of Enterprises' Declarations to Enjoy Super Deduction Preferential Policies for R&D Expenses" (State Administration of Taxation Announcement No. 10 of 2022) and other policies respectively stipulate the deduction ratio of R&D expenses for small and medium-sized scientific and technological enterprises and the time during which they are allowed to enjoy the super deduction preferential treatment. The above two documents will be released in March and May 2022 respectively, but the implementation start time is January 1, 2022. In other words, relevant companies need to go back to the beginning of this year to check whether they meet the conditions stipulated in the policy. If the conditions are met, you should further check whether you have enjoyed the discount for the additional deduction of R&D expenses in the first three quarters in advance, and make relevant preparations for the annual accounting accordingly.

Some relatively complex tax policies require comprehensive judgment, otherwise it will affect the calculation of the company's current corporate income tax taxable income and the company's overall tax burden.

For example, hotel A's total assets and number of employees and other indicators meet the conditions for the recognition of a small and low-profit enterprise . When calculating annual operating performance at the beginning of the fourth quarter of this year, Hotel A estimated annual profits of about 3.5 million yuan. Taking into account the subsequent comprehensive recovery of tourism services, profits will increase year by year in the next 3-5 years. According to the "Announcement of the Ministry of Finance and the State Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Industrial and Commercial Households" (Announcement No. 12 of 2021 of the Ministry of Finance and the State Administration of Taxation) and the "Announcement of the Ministry of Finance and the State Administration of Taxation on the Further Implementation of Preferential Income Tax Policies for Small and Micro Enterprises" (the Ministry of Finance and the State Administration of Taxation) According to the provisions of the State Administration of Taxation Announcement No. 13 of 2022), for small and low-profit enterprises, the annual taxable income does not exceed 1 million yuan, a reduced rate of 12.5% is included in the taxable income; for small and low-profit enterprises, the annual taxable income exceeds 1 million yuan but does not exceed 3 million yuan, a reduced rate of 25% is included in the taxable income, and the corporate income tax is paid at a tax rate of 20%.

According to Hotel A's estimated annual profits, after taking into account tax adjustments, the taxable income exceeds 3 million yuan, which does not meet the " small and micro enterprise " identification standards. However, Hotel A purchased a set of intelligent robots worth 1.5 million yuan (excluding tax) in 2022, specifically to provide intelligent check-in and check-out services. Taking into consideration the current and future profit factors and tax situation, Hotel A can choose to include the robot in the current cost and expense in one lump sum in accordance with the provisions of the "Notice of the Ministry of Finance and the State Administration of Taxation on Corporate Income Tax Policies on Deduction of Equipment and Appliances" (Caishui [2018] No. 54), and deduct it when calculating taxable income. Then its corporate income tax tax payable in 2022 will be significantly reduced, thus meeting the conditions for income tax reduction and exemption for small and micro enterprises.

2

Take stock of adjustment matters and ensure the final settlement.

includes both regular tax adjustments and major adjustments. Generally speaking, regular tax adjustment matters do not vary much from year to year, and the probability of major risks during the annual settlement period is not high. For taxpayers with major tax adjustment matters, their significance and contingency require taxpayers to make necessary responses.

In 2017, a state-owned enterprise that the author worked for demolished a commercial property it held in accordance with the requirements of the local government. While paying a certain amount of demolition compensation, the government approved the company's plan to rebuild commercial properties in other districts. After professional judgment and decision-making, the enterprise, in accordance with the " Enterprise Policy Relocation Income Tax Management Measures " (State Administration of Taxation Announcement No. 40 of 2012), will deal with the relocation income, relocation expenses, relocation asset tax treatment, and relocation involved in this demolition and reconstruction project. For income tax collection and management matters such as income, tax management and accounting shall be carried out separately, and the policy-based corporate income tax policy for relocation shall be applied. In the same year, the demolition announcement, relocation and resettlement master plan, demolition compensation agreement and other policy-based relocation basis and relocation planning materials that should be submitted shall be submitted to the competent tax authorities in the same year. In June 2022, the new operating property was completed and registered, and the relocation plan has been basically completed. The company immediately started the summary and settlement of the income and expenses of this relocation, and recently completed the overall data calculation of this policy relocation, laying a solid foundation for the smooth development of its annual corporate income tax calculation.

In terms of enjoying preferential tax policies, taxpayers should focus on periodic and specific tax preferential policies.For example, in 2022, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology jointly issued the "Announcement on Increasing Pre-tax Deductions to Support Scientific and Technological Innovation" (Ministry of Finance, State Administration of Taxation Ministry of Science and Technology Announcement No. 28, 2022) clarifies that new equipment and appliances purchased by high-tech enterprises from October 1, 2022 to December 31, 2022 are allowed to be deducted in full in one go in the current year when calculating taxable income, and 100% super deduction is allowed before tax.

In this regard, B Pharmaceutical Group took into account the high proportion of high-tech pharmaceutical companies in the group and the large differences in annual benefits. When preparing for the 2022 corporate income tax settlement in the near future, it organized each company in the group to measure the actual implementation effect of the policy, and studied specific tax treatment plans based on the characteristics of each company. For example, Company C, a subsidiary of B Pharmaceutical Group, may not be able to continue to maintain the status of a high-tech enterprise, but it is still within the "validity period" of a high-tech enterprise in the fourth quarter of 2022. Then the one-time super deduction policy is allowed for the qualified instruments and equipment purchased by Company C in the fourth quarter. In this case, during the preparation stage of corporate income tax finalization in 2022, Enterprise C needs to consider whether to "correct" the relevant preferential treatment for high-tech enterprises that has been selected in the prepayment link, that is, to make up for the tax during the period of temporary prepayment at the 15% tax rate as required.

At the same time, due to policy changes, the conditions for enterprises to enjoy tax benefits have changed, and tax adjustments need to be made. For example, in December 2021, the "Announcement of the Ministry of Finance and other four departments on the release of the "Catalogue of Enterprise Income Tax Preferences for Environmental Protection, Energy and Water Saving Projects (2021 Edition)" and the "Catalogue of Enterprise Income Tax Preferences for Comprehensive Utilization of Resources (2021 Edition)" (Ministry of Finance, State Administration of Taxation, Development and Reform Commission, Ministry of Ecology and Environment Announcement No. 36 of 2021) was issued, and the catalog for enjoying tax preferences was comprehensively updated. In this case, enterprises that were able to enjoy tax preferences in the past are likely to be no longer in the adjusted catalog and will no longer be able to enjoy tax preferences; enterprises that were not able to enjoy tax preferences in the past are likely to be in the adjusted catalog and can enjoy tax preferences. For these changes, enterprises should conduct a comprehensive inventory in the final settlement and make accurate tax adjustments.

3

Do detailed basic work and timely self-examination and self-correction

In the preparation of corporate income tax final settlement, the preparation of basic data and materials is equally important. Judging from the author's practical experience, possible loopholes in basic work are mainly concentrated in data errata, compliance with pre-tax deduction vouchers, and completeness of retained information for reference. It is recommended that enterprises carry out self-examination and self-correction in a timely manner before the accounting begins. In terms of data correction,

mainly conducts careful comparisons of relevant data reported by taxpayers during the quarterly (or monthly) prepayment process. For example, there is a correlation between the quarterly (or monthly) average number of employees and total assets reported by taxpayers in their quarterly (or monthly) prepayment declaration and the "number of employees" and "total assets" in the "Enterprise Basic Information Form". If there are large data discrepancies, a risk prompt will appear when making a final settlement declaration. It is particularly important to note that the prepayment reporting of this information will directly affect the application of the aforementioned small and low-profit enterprise income tax preferential policy . In terms of pre-tax deduction vouchers,

mainly checks the completeness and compliance of the deduction vouchers. In 2018, the State Administration of Taxation issued the "Administrative Measures for Corporate Income Tax Pre-tax Deduction Vouchers ", which stipulated more comprehensive and clear regulations on the requirements and acquisition time for corporate income tax pre-tax deduction vouchers. Based on this, taxpayers should comprehensively sort out whether the pre-tax deductions obtained from production and operations in 2022 are complete, focusing on whether deduction certificates for special matters such as loan interest and bank fees have been obtained. At the same time, special attention should be paid to whether the filling in the remarks column of the invoice, the abbreviation of the invoice product and service code, tax items and tax rates, etc. are in compliance with the regulations. In terms of the integrity of the data retained for future reference,

mainly depends on whether sufficient accounting data is retained for future reference. At present, taxpayers mainly handle tax preferential treatment and asset loss matters through "self-judgment, declaration and enjoyment, and retention of relevant information for future reference."In practice, some taxpayers have carried out "self-judgment" and completed "declaration and enjoyment", but have neglected to "retain relevant information for future reference" and have difficulty meeting the requirements of the tax authorities in the subsequent management of corporate income tax, thus facing greater tax risks.

Preparing annual corporate income tax calculations is a systematic project that requires taxpayers to use a global perspective to conduct comprehensive consideration, professional judgment and systematic arrangements for corporate income tax taxable matters throughout the year. Only when you are fully prepared can you have a solid foundation and the final quality will be high. (Author's unit: Zhongrui Tax Accountants Group Co., Ltd.)

This article was published in the B1 version of " China Tax Report " on December 16, 2022.

Source: China Tax Report

Editor in charge: Du Wei Song Shujuan (010) 61930016