The parent company and subsidiaries are independent legal persons, and each company declares and pays taxes according to its own operating conditions.
Small-scale taxpayers of value-added tax declare according to income, while ordinary taxpayers declare according to output tax and input tax.
Additional tax is declared according to value-added tax, and enterprise income tax is declared according to the data of income, cost and total profit.
How to settle the related income tax of parent company and subsidiary company?
Article 50 of the Enterprise Income Tax Law stipulates: "Resident enterprises set up business institutions without legal person status in China, and pay enterprise income tax on a consolidated basis." China began to implement the enterprise income tax system in 2008, emphasizing that corporate enterprises or organizations are taxpayers of enterprise income tax, and non-independent accounting branches will automatically collect and pay enterprise income tax at the company headquarters. Therefore, enterprises need to choose carefully when setting up branches.
Trade-offs between branches and subsidiaries
Article 14 of the Company Law stipulates: "A subsidiary has the status of a legal person and independently bears civil liability according to law; The branch does not have legal person status, and its civil liability shall be borne by the company. " If an enterprise establishes a branch, so that it does not have legal person status and does not conduct independent accounting, the head office may pay enterprise income tax. In this way, the head office can adjust profits and losses and reasonably reduce the burden of enterprise income tax. Of course, the establishment of branches should consider three factors:
The first is the profit and loss of branches. When the head office is profitable and the newly established branch may lose money, the head office mode should be chosen. According to the provisions of the tax law, branches are non-independent taxpayers, and their losses can be made up by the profits of the head office. If a subsidiary is established, and the subsidiary is an independent taxpayer, its losses can only be made up by the profits realized in the following years, and the head office can not make up for the losses of the subsidiary, nor can it reduce the investment cost of its investment.
When the head office is losing money and the newly established branch may be profitable, the parent-subsidiary model should be chosen; Subsidiaries do not need to bear the losses of the parent company, but can accumulate development funds. The head office can transfer its good assets to its subsidiaries and dispose of its bad assets.
Secondly, the situation of enjoying tax incentives. According to the provisions of the tax law, when the head office enjoys tax preferential treatment but the branch office does not, it can choose the mode of the head office company, so that the branch office can also enjoy tax preferential treatment. If the branch has tax incentives, when the branch begins to make profits, it can change its registered branch into a subsidiary and enjoy the local tax incentives, which will receive better tax payment results.
Third, it is the form of profit distribution and risk responsibility of branches. Because branches do not have independent legal personality, it is not conducive to independent profit distribution. At the same time, if the branch has risks and related legal responsibilities, it may implicate the head office, while the subsidiary does not have such concerns.