First, the difference between turnover and profit.
Turnover is the total sales realized during the company's operation, reflecting the company's operating scale and market scale. However, the turnover does not fully represent the economic benefits of the company, because in order to obtain these incomes, the company also needs to pay various costs and expenses, such as raw material costs, employee salaries, rent, utilities and so on.
Profit is the company's net income after deducting all costs and expenses, which more accurately reflects the company's economic benefits and profitability. Therefore, when collecting taxes, the tax authorities pay more attention to the company's profits, rather than the simple turnover.
Second, the basis for the company to pay taxes
According to the tax law, companies need to pay taxes according to their taxable income. Taxable income refers to the total income obtained by the company in a certain period of time, MINUS the costs, expenses and losses allowed to be deducted by the tax law. This balance is actually the company's profit.
The tax department will verify the taxable income of the company according to the company's financial statements and tax returns, and calculate the taxable amount according to the tax rate stipulated in the tax law. Therefore, the amount of tax paid by a company is directly related to its profit level.
Third, reasonable tax avoidance and tax planning.
Although the company needs to pay taxes according to profits, legal tax avoidance and tax planning are also an indispensable part of the company's management. By reasonably arranging the business structure of the company, optimizing financial management and applying preferential tax policies, the company can reduce the tax burden and improve economic benefits on the premise of legal compliance.
To sum up:
Companies pay taxes on profits rather than turnover. The tax department will verify the tax payable according to the taxable income of the company and the tax rate stipulated in the tax law. Therefore, the company should pay attention to the promotion of profits and reasonable tax avoidance and tax planning in its operation and management in order to maximize economic benefits.
Legal basis:
People's Republic of China (PRC) enterprise income tax law
Article 5 provides that:
Taxable income is the total income of an enterprise in each tax year, after deducting non-taxable income, tax-free income, various deductions and losses allowed to make up in previous years.
People's Republic of China (PRC) enterprise income tax law
Article 6 provides that:
The income obtained by enterprises from various channels in monetary and non-monetary forms is the total income. Including:
(1) Revenue from the sale of commodities;
(2) Income from providing labor services;
(3) Income from property transfer;
(four) dividends, bonuses and other equity investment income;
(5) Interest income;
(6) Rental income;
(7) Royalty income;
(8) Receiving donation income;
(9) Other income.