When foreign enterprises provide loans to domestic companies, they need to declare and pay business tax, additional tax and enterprise income tax in China to obtain interest income.
Company A is a wholly foreign-owned enterprise engaged in the production of electronic products in China, and its parent company is American Company B (a non-financial institution). Company B has no organization or place in China. Due to the needs of production and operation, Company A intends to borrow money from Company B, and repay the principal and interest once due. What are the requirements of this business for the loan amount of Company A? What taxes does foreign company B involve?
There is a limit to the amount of foreign debt borrowed.
According to the Interim Measures for the Administration of Foreign Debt, foreign debt refers to the foreign currency debt borne by domestic institutions to non-residents.
Article 18 of the Interim Measures for the Administration of Foreign Debt stipulates that the sum of the accumulated amount of medium and long-term foreign debts borrowed by foreign-invested enterprises and the balance of short-term foreign debts shall be controlled within the difference between the total project investment approved by the examination and approval department and the registered capital. Within the margin, foreign-invested enterprises can borrow foreign debts on their own. If the difference is exceeded, the total investment of the project shall be re-approved by the original examination and approval department. ? Therefore, the amount of foreign debt borrowed by Company A is the difference between its total investment and registered capital. For example, the approved total investment of Company A is1000000 USD, and the registered capital is 50 million USD. If Company A has no other foreign debts, the amount of foreign debts that Company A can borrow is $50 million; If Company A borrows a one-year outstanding loan of $30 million from an overseas bank, the amount of foreign debt that Company A can borrow is $20 million.
In addition, according to the Measures for the Administration of Foreign Debt Registration (Huifa [20 13] 19), when Company A borrows from Company B, it needs to register its foreign debt with the local foreign exchange bureau ... When Company A repays the principal and interest of the loan to Company B, it needs to go to the local foreign exchange bureau for cancellation registration of its foreign debt.
business tax
What is stipulated in the Notice of State Taxation Administration of The People's Republic of China on Printing and Distributing the Answers to Business Tax Questions (Part I) (Guo Fa [1995] 156)? "Notes on Business Tax Items" stipulates that loans belong to? Financial insurance? The scope of taxation, and loan refers to the act of lending funds to others for use. According to this regulation, whether it is a financial institution or other units, as long as it is the act of lending funds to others, it should be recognized as lending behavior. Financial insurance? Business tax is levied according to tax items. ? Item (1) of Article 4 of the Detailed Rules for the Implementation of the Provisional Regulations on Business Tax stipulates that units or individuals that provide or accept business tax services in China belong to providing services in China. Company B shall pay business tax at the rate of 5% if it borrows money from Company A in China and obtains interest income. Article 21 of the Detailed Rules for the Implementation of the Provisional Regulations on Business Tax stipulates that if a taxpayer settles his turnover in a currency other than RMB, the RMB conversion rate of his turnover can choose the middle rate of RMB exchange rate on the day when the turnover occurs or on the day of 1 of the current month. Taxpayers should determine the conversion rate in advance, which shall not be changed within 1 year after determination. ? The US dollar interest earned by Company B shall be converted into RMB according to the central parity of RMB exchange rate on the day when the turnover occurs or on the day of the current month 1, and the business tax shall be calculated and paid.
According to 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 Relevant Issues Concerning the Collection of Urban Maintenance and Construction Tax and Additional Education Fees by Foreign-invested Enterprises (Caishui [20 10] 103) and the Notice of the Ministry of Finance on Relevant Issues Concerning the Unification of Additional Policies for Local Education (Caizong [20 10]98), Company B still needs to pay urban maintenance.
According to the Provisional Regulations on Business Tax, Company B has the obligation to pay business tax when the loan expires, and Company A shall withhold and remit the business tax and surcharges of Company B when the loan expires, and report and pay to the local competent tax authorities where Company A is located.
stamp tax
According to the Table of Stamp Tax Items and Rates, loan contracts refer to loan contracts signed by banks and other financial institutions with borrowers (excluding interbank lending). The loan contract signed by Company A and Company B does not belong to the loan contract in the stamp duty tax item, and the contract does not belong to the stamp duty taxable certificate. Neither company A nor company B needs decals.
industrial and commercial income tax
Article 7 (5) of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that the income from interest, rent and royalties shall be determined according to the location of the enterprise or institution that undertakes or pays the income, or according to the "residence" of the individual who undertakes or pays the income, and the income from inside or outside China. The interest paid by Company A in China and Company B belongs to the income from China.
Company B is a non-resident enterprise. According to the enterprise income tax law: If a non-resident enterprise has no institution or place in China, or if it has an institution or place, but its income has no actual connection with its institution or place, it shall pay enterprise income tax on its income originating in China. ? Company B shall pay enterprise income tax in China when it obtains interest. The corporate income tax rate applicable to the interest income of Company B is 10%.
Articles 3, 7 and 9 of the Notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Printing and Distributing the Interim Measures for the Administration of Withholding Income Tax Sources of Non-resident Enterprises (Guo Shui Fa [2009] No.3) stipulate that Company A shall withhold and remit the enterprise income tax of Company B when paying interest to Company B or when the interest expires, and Company A shall pay interest to Company B in US dollars. When declaring withholding enterprise income tax, it shall be converted into RMB according to the central parity of RMB exchange rate announced by the state on the day of withholding. In practice, it is implemented according to the central parity of RMB exchange rate on the day when the enterprise declares the withholding to the tax authorities. According to Item (1) of Article 2 of the Notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Adjusting the Scope of New Enterprise Income Tax Collection and Management (Guo Shui Fa [2008] 120), Company A shall declare and pay its income tax to the competent tax authorities.
Suppose that Company A can borrow 50 million dollars from Company B, with a term of half a year and an interest rate of 10%, and repay the principal and interest at maturity. On the expiration date of the loan contract, Company A paid Company B the principal of 50 million dollars and the interest of 2.5 million dollars. On that day, the central parity of RMB exchange rate was 6 yuan/USD, and the urban construction tax rate was 7%. So company A should withhold business tax: 250? 6? 5%=75 (ten thousand yuan); Urban construction tax and other additional taxes and fees: 75? (7%+3%+2%)=9 (ten thousand yuan); Corporate income tax: 250? 6? 10%= 150 (ten thousand yuan); Withholding income tax of 2.34 million yuan.
The accounting entries of Company A are as follows (unit: 10,000 yuan):
Borrow $50 million from company B.
Borrow: Bank deposit? Dollars (5000? 6.0 1) 30050
Loans: Other payables? Company B (USD) (5000? 6.0 1)30050
Final adjustment
Borrow: Other payables? Company B (USD) 50
Loan: financial expenses? Exchange difference 50
Interest accumulates at the end of each month.
Debit: financial expenses 250.02
Loans: Other payables? Company B (USD) (4 1.67? 6.00) 250.02
Among them, the last month's interest accrual needs to consider the influence of rounding.
Debit: financial expenses 249.90
Loans: Other payables? Company B (USD) (4 1.65? 6.00) 249.90
B company tax extraction
Borrow: Other payables? Company B (USD) 234
Loan: Do I have to pay taxes? Withholding business tax and surcharges 84