1. At the end of the year, the wholly-owned subsidiary will pay the total annual profit to the parent company, which will pay the relevant taxes.
2. When the income tax rate of the investor's enterprise is higher than that of the invested enterprise, the investment income shall be written down as pre-tax income, included in the taxable income of the investing enterprise and refunded.
3. As an independent legal person, when the undistributed profits of subsidiaries are distributed to the parent company, the parent company shall include them in the profits of the current year and calculate and pay enterprise income tax.
Capital transaction between parent company and subsidiary company:
1. Dividend distribution: The parent company, as the shareholder of the subsidiary, can obtain the profit dividend of the subsidiary through dividend distribution;
2. Management fee collection: the parent company can provide management services to its subsidiaries and collect management fees from them;
3. Internal borrowing: the parent company can borrow internally from its subsidiaries to realize the temporary allocation of funds;
4. Asset transfer: the parent company can realize the circulation of funds by purchasing assets or equity of subsidiaries;
5. Intra-group settlement: centralized management and allocation of funds through the intra-group settlement center.
To sum up, the ways for the parent company to obtain funds from subsidiaries include the year-end profits paid by wholly-owned subsidiaries, the adjustment of investment income according to regulations under the difference of taxes and tax rates paid by the parent company, and the distribution of undistributed profits by subsidiaries to the parent company. After that, the parent company needs to include the profits of the current year and pay the corresponding enterprise income tax.
Legal basis:
Company Law of the People's Republic of China
Article 14
Companies can set up branches. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company.
A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.