1. At the end of the year, the wholly-owned subsidiary will pay the total annual profit to the parent company, which will pay corporate income tax, value-added tax, urban construction tax, education tax surcharge and other taxes.
2. If the income tax rate applicable to the investment enterprise is higher than that applicable to the invested enterprise, in addition to enjoying the preferential treatment of regular tax reduction and exemption as stipulated by national tax laws and regulations, the investment income obtained shall be restored as pre-tax income according to regulations, incorporated into the taxable income of the investment enterprise, and the enterprise income tax shall be paid back according to law.
The relationship between subsidiaries and parent companies is as follows:
1. The subsidiary is actually controlled by the parent company. The parent company has the actual decision-making power on major issues of its subsidiaries, can decide the composition of the board of directors of its subsidiaries, and can directly exercise the right to appoint directors of the board of directors;
2. The relationship between parent company and subsidiary company is based on the agreement of share possession or control. Shareholders with more shares have greater decision-making power over company affairs. Therefore, if a company owns more than 50% of the shares of another company, it can actually control the company. In practice, the shares of most companies are scattered, and as long as they have more than a certain proportion of shares, they can obtain a controlling position. In addition to controlling shares, a company can also control another company by concluding some special contracts or agreements;
3. The parent company and subsidiaries are independent legal persons. Although subsidiaries are actually controlled by the parent company, restricted and managed by the parent company in many aspects, and some of them are actually similar to the branches of the parent company, legally speaking, subsidiaries belong to independent legal persons, engage in business activities in their own names and independently bear civil liabilities. Subsidiaries have their own articles of association, board of directors and other corporate decision-making bodies. A subsidiary has its own independent property, and the property it actually occupies and uses belongs to the subsidiary and has its own balance sheet.
legal ground
Company Law of the People's Republic of China
Article 14 A company may 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.