In a tax year, if an individual investor borrows money from an enterprise (except a sole proprietorship enterprise or a partnership enterprise) that he invests in, and it is neither returned nor used for the production and operation of the enterprise after the end of the tax year, the unpaid loan can be regarded as the dividend distribution of the enterprise to the individual investor, and personal income tax is levied according to the item of "interest, dividend and dividend income". State Taxation Administration of The People's Republic of China also issued an announcement, emphasizing the strengthening of the management of individual investors' borrowing from their investment enterprises. Personal income tax will be levied in strict accordance with the relevant regulations on loans with a term exceeding 1 year and not used for the production and operation of enterprises. Notice of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China of the Ministry of Finance on Regulating the Collection and Management of Individual Income Tax of Individual Investors Article 1 Concerning the handling of individual investors paying their consumption expenses with the funds of enterprises (including sole proprietorship enterprises, partnerships and other enterprises) and buying family property for themselves, family members and their related personnel, individual investors of sole proprietorship enterprises and partnerships take enterprise funds as their own. Family members and their related personnel pay consumption expenses unrelated to the production and operation of the enterprise and purchase property expenses such as automobiles and houses, which are regarded as profits distributed by the enterprise to the individual investors and incorporated into the income from the individual production and operation of the investors, and personal income tax is levied according to the item of "income from the production and operation of individual industrial and commercial households". Consumer expenses and property expenses such as buying cars and houses paid by individual investors of enterprises other than sole proprietorship enterprises and partnership enterprises for themselves, family members and their related personnel are regarded as dividend distribution by enterprises to individual investors, and personal income tax is levied according to the items of "interest, dividends and bonus income". The above expenses of the enterprise are not allowed to be deducted before income tax.
Legal objectivity:
Individual Income Tax Law Article 2 Individual income tax shall be paid on the following personal income: (1) Income from wages and salaries; (2) Income from remuneration for labor services; (3) Income from remuneration; (4) Income from royalties; (5) Operating income; (6) Income from interest, dividends and bonuses; (7) Income from property lease; (8) Income from property transfer; (9) Accidental income. Individual residents who obtain income from items 1 to 4 of the preceding paragraph (hereinafter referred to as comprehensive income) shall calculate individual income tax according to the tax year; Non-resident individuals who obtain income from items 1 to 4 of the preceding paragraph shall calculate individual income tax on a monthly or itemized basis. Taxpayers who obtain income from items 5 to 9 of the preceding paragraph shall calculate individual income tax separately in accordance with the provisions of this law.