Carry forward costs at book value
The Enterprise Income Tax Law of People's Republic of China (PRC) stipulates that after the special (tax-free) separation, the value-added and loss of the assets of the separated enterprise have not been confirmed in tax, so the cost of accepting all the assets and liabilities of the separated enterprise by the separated enterprise shall be carried forward on the basis of the net book value of the separated enterprise, and shall not be adjusted according to the value confirmed by the assessment. At the same time, the losses of the separated enterprise that have not exceeded the statutory compensation period can be distributed according to the proportion of the separated assets to all assets, and the separated enterprise that accepts the separated assets will continue to make up for them.
Item (5) of Article 6 of the Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China, on Several Issues Concerning the Treatment of Enterprise Income Tax for Enterprise Reorganization (Caishui [2009] No.59) stipulates that the separation of enterprises that meet the special tax treatment can be handled according to the following provisions: 1 The tax basis of the assets and liabilities of the separated enterprise shall be determined according to the original tax basis of the separated enterprise; 2. The income tax items corresponding to the separated assets of the separated enterprise shall be inherited by the separated enterprise; 3. The losses of the separated enterprise that have not exceeded the statutory compensation period can be distributed according to the proportion of the separated assets to all assets, and the separated enterprise will continue to make up for them.
Example: A head office was established by four shareholders with a registered capital of 8 million yuan, and each shareholder contributed 2 million yuan, each holding 25% of the shares. Now the company consists of headquarters A and branch B. The book assets of headquarters A are100000 yuan, and the appraised value is120000 yuan; The book assets of Branch B are 4 million yuan, the appraised value is 6 million yuan and the net assets are 4 million yuan. In order to further accelerate the company's development, the head office decided to separate Branch B and set up a new Company C. All the assets were converted into Company C 10000 shares, and each of the four shareholders of the head office got 2500 shares.
Analysis: According to the provisions of Caishui [2009] No.59 document, the shareholders of enterprise A have not obtained the non-equity payment and meet the conditions of special reorganization, so they can declare tax-free reorganization to the tax authorities. The appreciation of RMB 2 million assessed by Branch B is not calculated as transfer income. When the separate enterprise C accepts all the assets of branch B, it must be determined with its net book value of 4 million yuan as the tax basis, and shall not be determined according to the value of 6 million yuan confirmed by the assessment. Therefore, when enterprise C disposes of assets for tax deduction, it can only be calculated as 4 million yuan. In fact, it is realized by putting the unrealized gains of enterprise A's asset appreciation in enterprise C. It can be seen that the special treatment of tax-free separation is only deferred tax payment.
Divided assets are not regarded as distribution to shareholders.
Because the equity of the newly established enterprise is distributed to the original shareholders, in fact, the assets separated from the original enterprise are distributed to the shareholders, which is considered as distribution. However, the document Caishui [2009] No.59 stipulates that tax-free separation cannot be regarded as distribution, and the shareholders of the separated enterprise obtain the equity of the separated enterprise (hereinafter referred to as "new shares"). If it is necessary to give up the original equity of the separated enterprise (hereinafter referred to as "old shares"), the tax basis of new shares shall be determined according to the tax basis of those who give up the old shares. If you don't need to give up the old shares, you can choose two methods to determine the tax basis of the new shares: directly determine the tax basis of the new shares to zero, or reduce the tax basis of the old shares originally held by the separated enterprise according to the proportion of the total net assets of the separated enterprise, and then distribute the reduced tax basis to the new shares equally.
For example, if the shareholders of the separated enterprise do not give up the old shares of enterprise A, the taxable cost of obtaining the equity of enterprise C can be determined in the following two ways:
1. The four shareholders of the head office do not reduce the equity cost of enterprise A, but determine the total taxable cost of 10000 shares of enterprise C as zero.
2. Reduce the cost of some old shares and add them to the new shares of a separate enterprise. According to the ratio of the reduced asset appraisal value to the total assets of the original enterprise, the taxable cost of the newly added shares is = 200× 600/ 1800 = 667 (ten thousand yuan), that is, four shareholders hold13.33 million yuan and 667,000 yuan in the head office and company C respectively.