How should the compensation for enterprise demolition be taxed?

First, the enterprise relocation compensation should pay enterprise income tax.

At present, laws and regulations have not yet issued tax exemption policies related to enterprise expropriation and demolition, so the compensation obtained by enterprises due to expropriation and demolition does not belong to the scope of tax exemption and non-tax. After the enterprise obtains the compensation for demolition and deducts the corresponding expenses according to law, the remaining compensation shall be subject to enterprise income tax at the enterprise income tax rate of 25%.

Two, enterprises use relocation compensation to purchase new land, houses, machinery and equipment shall not be deducted, deductible items for relocation costs and asset disposal costs.

1. Article 15 of People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.2012 No.40 Measures for the Administration of Income Tax on Policy Relocation of Enterprises (hereinafter referred to as Document No.40) stipulates that "all kinds of assets purchased by enterprises in the process of reconstruction or resumption of production shall not be deducted from relocation income as relocation expenses". The first item of AnnouncementNo. 1 1, Announcement No.201of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), stipulates that "any policy relocation project with relocation agreement signed after 20 12 1 shall not be used as relocation expenses".

Note to enterprises: The provision that the expenses for purchasing land, houses, machinery and equipment can be deducted in the Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on Policy Relocation or Disposal of Enterprise Income TaxNo. 1 18 has been cancelled. Abolish article 2 of the document. 1 18 stipulates: "in the relocation planning of enterprises, the original production and operation are resumed or converted after reconstruction in different places. If the proceeds from the relocation or disposal of an enterprise are used to purchase and build new fixed assets and land use rights with the same or similar nature and use as before the relocation, or to improve other fixed assets, carry out technological transformation and resettle employees, the proceeds from the relocation or disposal are allowed to be deducted from the expenditure on the replacement or improvement of fixed assets and the expenditure on technological transformation.

Therefore, for the enterprise demolition projects after June 1 2+1October1,the cost of replacing land, houses, machinery and equipment shall not be deducted from the demolition compensation. This part is often a large amount, so business owners should make careful decisions on newly purchased projects in the process of relocation to avoid non-deductible tax risks with large tax payable.

2. The enterprise relocation compensation deduction project is mainly aimed at employee placement, asset sale and relocation expenses. This part accounts for a relatively small proportion of the asset replacement cost, but there are many detailed items, which generally exist in the process of enterprise relocation. Enterprises need to pay attention to the financial accounting under specific deduction items.

In practice, the calculation results of all deductible items account for about 5% of the total compensation for demolition. If the enterprise has professional accountants and tax personnel to sort out the materials and restore the true situation of the above expenses, the above deductible items may reach about 20% of the total compensation for demolition.

According to the provisions of Articles 8, 9 and 10 of State Taxation Administration of The People's Republic of China Announcement No.40 (20 12), these projects specifically include:

1, the actual cost of staff placement;

2. Wages and welfare funds paid to employees during the shutdown period;

3. The expenses incurred in temporarily storing the relocated assets;

4, all kinds of assets relocation and installation fees and other expenses related to the relocation;

5. The expenses incurred by the enterprise due to the relocation and disposal of various assets, including the net value of the sale and disposal of various assets, taxes and fees incurred during the disposal, etc.

6. If the assets scrapped by the enterprise due to relocation have no transfer value, its net value shall be regarded as the asset disposal expenses of the enterprise.

Three, in line with the conditions of policy relocation, enterprises can apply for the record to obtain the preferential policy of five years' deferred tax payment for demolition compensation.

Document No.40 provides preferential policies for enterprises to postpone tax payment, which stipulates that enterprises can enjoy a maximum of five years' tax deferred period from the year of relocation to May 3 1 day of the following year by submitting relevant materials such as policy relocation basis and relocation plan to the competent tax authorities.

Due to the existence of the bottom clause, the scope of policy relocation is larger. If the main body of expropriation and demolition is the government; Based on these two conditions of public interest, the demolition project can basically be included in the scope of policy demolition. Document No.40 clearly defines the interests of the public, and enterprises should determine the nature of the demolition project in time when receiving the relocation announcement:

(a) the needs of national defense and diplomacy;

(two) the needs of energy, transportation, water conservancy and other infrastructure organized and implemented by the government;

(three) the needs of public utilities such as science and technology, education, culture, health, sports, environmental and resource protection, disaster prevention and mitigation, cultural relics protection, social welfare, and municipal utilities organized and implemented by the government;

(four) the needs of the construction of affordable housing projects organized and implemented by the government;

(five) in accordance with the relevant provisions of the People's Republic of China (PRC) Urban and Rural Planning Law, the needs of the old city reconstruction organized and implemented by the government;

(six) the needs of other public interests as prescribed by laws and administrative regulations.

Deferred tax payment refers to the relocation income and expenses incurred during the relocation period, which can be temporarily excluded from the taxable income of the current period. Instead, after five years of relocation, the balance of relocation compensation will be summarized, liquidated and taxed.

To sum up, after obtaining the compensation for demolition, enterprises should make clear their corporate income tax obligations, judge whether they can enjoy preferential tax policies in time, and understand the relevant requirements of the above tax-related matters to avoid the risk of unpaid taxes.