How to pay taxes on capital reduction

After an enterprise invests abroad, it will withdraw or reduce its capital according to the capital status, business prospect and business strategy of the invested enterprise. Withdrawal is to recover all the investment, and capital reduction is to recover part of the investment. Article 178 of the Company Law stipulates that when a company needs to reduce its registered capital, it must prepare a balance sheet and a list of assets. The company shall notify the creditors within ten days from the date of making the resolution to reduce the registered capital, and make an announcement in the newspaper within thirty days. Creditors have the right to require the company to pay off debts or provide corresponding guarantees within 30 days from the date of receiving the notice, or within 45 days from the date of announcement if they have not received the notice. The registered capital of the company after capital reduction shall not be lower than the statutory minimum.

Stock withdrawal and capital reduction will mainly involve two taxes: corporate income tax and personal income tax.

1, calculation of enterprise income tax

Announcement of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China on Several Issues Concerning Enterprise Income Tax (State Taxation Administration of The People's Republic of China Announcement No.34 20 1 1) stipulates: "If an investment enterprise withdraws or reduces its investment from the invested enterprise, the part of its assets equivalent to the initial investment shall be recognized as investment recovery; The part equivalent to the accumulated undistributed profits and accumulated surplus reserves of the invested enterprise, which reduces the proportion of paid-in capital, is recognized as dividend income; The rest is recognized as investment asset transfer income. The operating loss of the invested enterprise shall be carried forward by the invested enterprise to make up for it; Investment enterprises shall not adjust and reduce investment costs, nor shall they be recognized as investment losses. "

The principle of tax treatment for the assets returned by an investment enterprise from the invested enterprise due to divestment or capital reduction is basically the same as the principle of enterprise liquidation income tax, that is, after deducting the initial investment cost, the part belonging to retained earnings is recognized as dividend income, and the rest is recognized as equity transfer income. The reason why this principle is adopted is mainly because withdrawing or reducing capital belongs to the termination of all or part of the investment relationship, and this part of the investment rights and interests has ended, that is, the continuity of rights and interests no longer exists. In addition, if the investment enterprise returns the physical assets from the invested enterprise, it shall confirm the income or income according to the fair value of the physical assets.

2. Calculation of individual income tax

The Announcement of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on Individual Income Tax Collection for Withdrawing Funds from Investment and Operation (State Taxation Administration of The People's Republic of China Announcement No.201KLOC-0/No.41) stipulates: "The income from equity transfer, liquidated damages, compensation and money recovered in other names obtained by individuals from invested enterprises or cooperative projects due to various reasons, Other investors of the invested enterprise and business partners of the cooperative project are taxable income of individual income tax, and individual income tax shall be calculated and paid according to the applicable provisions of "income from property transfer". The calculation formula of taxable income is: taxable income = the total amount of equity transfer income, liquidated damages, compensation, compensation and money recovered in other names obtained by individuals-the original actual investment (investment amount) and related taxes. " Assets returned by individuals from the invested enterprise due to divestment or capital reduction. The part that exceeds the investment cost shall be fully recognized as the income from property transfer.

Policy link:

1. Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Several Issues Concerning Enterprise Income Tax

Release date: 20 1 1 June 2009 Japanese number: People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Bulletin No.201/No.34.

According to the relevant provisions of the Enterprise Income Tax Law of People's Republic of China (PRC) (hereinafter referred to as the Tax Law) and the Implementation Regulations of the Enterprise Income Tax Law of People's Republic of China (PRC) (hereinafter referred to as the Implementation Regulations), some issues concerning enterprise income tax are hereby announced as follows:

I. Determination of interest rates for similar loans of financial enterprises in the same period

According to the provisions of Article 38 of the Implementation Regulations, pre-tax deduction is allowed for the interest expenses borrowed by non-financial enterprises from non-financial enterprises that do not exceed the amount calculated according to the interest rate of similar loans of financial enterprises in the same period. In view of China's current interest rate requirements for financial enterprises, enterprises should provide "a description of the interest rate of similar loans of financial enterprises in the same period" when paying interest for the first time and deducting it before tax according to the contract requirements, so as to prove the rationality of their interest expenses.

"Description of similar loan interest rates of financial enterprises in the same period" shall include the similar loan interest rates provided by any financial enterprise in this province at the time of signing the loan contract. Financial enterprises should be enterprises engaged in loan business with the approval of relevant government departments, including banks, finance companies, trust companies and other financial institutions. "Interest rate of similar loans in the same period" refers to the loan interest rate provided by financial enterprises under the condition that the loan term, loan amount, loan guarantee and corporate reputation are basically the same. It can be the average interest rate of the same kind announced by financial enterprises in the same period, or the actual loan interest rate provided by financial enterprises to some enterprises.

Second, about the deduction of clothing expenses for enterprise employees.

According to the nature and characteristics of the enterprise's work, the clothing expenses produced by the enterprise and required by the employees' work can be deducted before tax as the reasonable expenses of the enterprise according to the provisions of Article 27 of the Implementation Regulations.

Three, about the deduction of training fees for aircrew in aviation enterprises.

According to the provisions of Article 27 of the Implementation Regulations, the actual pilot training fees, flight training fees, crew training fees and air guard training fees incurred by aviation enterprises can be deducted before tax as transportation expenses of aviation enterprises.

Four, on the tax treatment of fixed assets of houses and buildings.

If an enterprise rebuilds or expands fixed assets such as houses and buildings before fully withdrawing depreciation, or dismantles or replaces them, the original value of the assets shall be deducted from the net value after withdrawing depreciation, which shall be included in the taxable cost of replacing the fixed assets, and depreciation shall be accrued together with the depreciation period stipulated in the tax law from the next month when the fixed assets are put into use; If it belongs to upgrading function and increasing area, the expenses for the renovation and expansion of fixed assets will be incorporated into the tax basis of fixed assets, and the depreciation will be re-accrued according to the depreciation period of fixed assets stipulated in the tax law from the next month after the renovation and expansion is completed and put into use. If the service life of the rebuilt and expanded fixed assets is lower than the minimum service life stipulated in the tax law, depreciation can be accrued according to the service life.

Five, the tax treatment of investment enterprises to withdraw or reduce investment.

When an investment enterprise withdraws or reduces its investment in the invested enterprise, the part of its assets equivalent to the initial investment is recognized as investment recovery; The part equivalent to the accumulated undistributed profits and accumulated surplus reserves of the invested enterprise, which reduces the proportion of paid-in capital, is recognized as dividend income; The rest is recognized as investment asset transfer income.

The operating loss of the invested enterprise shall be carried forward by the invested enterprise to make up for it; An investment enterprise shall not adjust or reduce the investment cost, nor shall it be recognized as an investment loss.

Six, about the enterprise to provide valid documents.

If the relevant costs and expenses actually incurred by the enterprise in the current year cannot be obtained in time for various reasons, the enterprise may temporarily account for the book amount when paying quarterly income tax in advance; However, at the time of final settlement, valid vouchers of costs and expenses should be supplemented.

Seven. This announcement shall come into force on July 20 1 year 1 day. Before the implementation of this announcement, the relevant matters of the enterprise have been dealt with according to the provisions of this announcement, and no adjustments will be made; If it has been dealt with, but it is inconsistent with the provisions of this announcement, and the taxable income of the enterprise needs to be reduced according to the provisions of this announcement, the taxable income of the enterprise shall be reduced accordingly 20 1 1 year after the implementation of this announcement.

It is hereby announced.

20 1 1 June 9, 2008

2. Notice of People's Republic of China (PRC) State Taxation Bureau on Strengthening the Management of Individual Income Tax from Equity Transfer

Date of issue: June 2009 12 Japanese number: Guoshuihan [2009] No.285.

Local tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, and State tax bureaus of Tibet, Ningxia and Qinghai provinces (autonomous regions):

In order to strengthen the individual income tax collection and management of natural person (hereinafter referred to as individual) shareholders' equity transfer, improve the quality and efficiency of tax collection and management, and plug the loopholes in tax collection and management, according to the Individual Income Tax Law of People's Republic of China (PRC) and its implementing regulations, the Law of People's Republic of China (PRC) on Tax Collection and Management and its implementing rules, and Several Opinions of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China on Strengthening Tax Collection and Management to Promote Leakage and Increase Income (Guo Shui Fa [2000],

1. After both parties to the equity transaction sign the equity transfer agreement and complete the equity transfer transaction, but before the enterprise changes its equity registration, the transferor or transferee who has the obligation to pay taxes or withhold and remit shall go through the tax payment (withholding) declaration with the competent tax authorities, and go through the formalities of equity change registration with the administrative department for industry and commerce on the basis of the personal income tax payment certificate or tax exemption or no tax certificate issued by the tax authorities.

Second, both parties to the equity transaction have signed an equity transfer agreement, but the equity transfer transaction has not yet been completed. When an enterprise applies to the administrative department for industry and commerce for the registration of equity change, it shall fill in the Report Form on the Change of Individual Shareholders (the form style and joint number shall be designed by the provincial local tax authorities themselves) and report to the competent tax authorities.

Three. Individual income tax on the transfer of individual shareholders' equity shall be collected by the tax authorities where the enterprise changes its equity. Taxpayers or withholding agents shall go through the formalities of tax declaration and tax storage with the competent tax authorities. The competent tax authorities shall, in accordance with the provisions of the Individual Income Tax Law and the Tax Administration Law, obtain information on individual equity transfer, manage, evaluate and inspect the tax-related matters of equity transfer, and punish the tax violations involved in it according to law.

Four, the tax authorities should strengthen the assessment and audit of the tax basis for the income from equity transfer. We should carefully examine the information about the income from equity transfer declared by withholding agents or taxpayers, and judge whether the equity transfer behavior conforms to the principle of independent trading, rational economic behavior and actual situation.

If the declared tax basis is obviously low (such as parity, low-price transfer, etc.). Without justifiable reasons, the competent tax authorities may refer to the net assets per share or the share of net assets corresponding to the proportion of rights and interests enjoyed by individual shareholders for verification.

Five, the tax authorities should establish an internal control mechanism for the collection of personal income tax on the income from equity transfer. The tax authorities should establish an electronic ledger of individual income tax on equity transfer, register individual shareholders of enterprises under their jurisdiction door by door, input relevant information of individual shareholders into the computer system, and implement dynamic management. All departments within the tax authorities are responsible for information collection, assessment and audit, tax collection and storage, feedback inspection and other links, and all departments should strengthen contact and cooperate closely to form a complete management chain.

Six, local tax authorities should attach great importance to the management of individual income tax collection of equity transfer, in accordance with the requirements of this notice, take effective measures to actively carry out the work. It is necessary to win the support of local party committees and governments, strengthen contact and cooperation with the administrative department for industry and commerce, and take the initiative to obtain the registration information of equity change from the administrative department for industry and commerce on a regular basis. For taxpayers, withholding agents and enterprises in changes in equity, do a good job in the publicity and guidance of relevant tax laws and policies to ensure that taxes are put into storage in full and on time.

3. Announcement of State Taxation Administration of The People's Republic of China on the issue of levying individual income tax on the money recovered from the termination of investment operation.

Issue date: 20 1 1 Japanese serial number: People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.465438 +0+065438.

According to the provisions of the Individual Income Tax Law of People's Republic of China (PRC) and its implementing regulations, the issue of levying individual income tax on the money recovered from individual termination of investment, joint venture and cooperative operation is hereby announced as follows:

1. Individuals terminate their investment, joint venture, business cooperation and other behaviors for various reasons, and the income from equity transfer, liquidated damages, compensation and money recovered in other names obtained from the invested enterprise or cooperative project, the invested enterprise and other investors of cooperative project are all taxable income of individual income tax, and should be calculated and paid according to the applicable provisions of the "income from property transfer" project.

The calculation formula of taxable income is as follows:

Taxable income = the total amount of equity transfer income, liquidated damages, compensation and money recovered in other names obtained by individuals-the original actual investment amount (investment amount) and related taxes and fees.

Two. The issues concerning the collection and management of individual income tax in this announcement shall be implemented in accordance with the Notice of People's Republic of China (PRC) State Taxation Bureau on Strengthening the Management of Individual Income Tax on Equity Transfer (Guo [2009] No.285).

This announcement shall come into force as of the date of promulgation, and matters not covered before shall be handled according to this announcement.

It is hereby announced.

20 1 1 July 25th, 2008