(1) The subsidiary is a legal person with its own name, articles of association and organization. It conducts activities in its own name and undertakes the creditor's rights and debts arising from its own operation. The branch does not have the qualification of enterprise legal person. If there is no name, it should be preceded by the name of the subordinate company, which is established according to law and is only a branch of the company.
(2) The parent company's control over its subsidiaries must meet certain legal conditions. Generally, the parent company does not directly control its subsidiaries, but more indirectly controls them, that is, it affects the production and operation decisions of subsidiaries by appointing and dismissing board members and making investment decisions. However, branch offices are different. Its personnel, business and property are directly controlled by affiliated companies and engaged in business activities within the business scope of affiliated companies.
(3) Different ways to assume debts. As the largest shareholder of the subsidiary, the parent company is only responsible for the debts in the operating activities of the subsidiary to the extent of its capital contribution to the subsidiary; As a legal person, the subsidiary company is responsible for its business responsibility with all its property. Because the branch company has no property of its own, it is accounted for together with the affiliated company economically, so the liabilities in its business activities are paid off by the affiliated company, that is, the affiliated company is liable for the debts in its operation to the extent of all its assets.
As can be seen from the above, the tax preferences of subsidiaries and branches are quite different, so companies and enterprises should carefully compare, make overall consideration and plan correctly when choosing organizational forms. But in general, the most important difference between these two organizational forms is:
A subsidiary is a legal entity, which is regarded as a resident taxpayer in the country where it is established and usually bears the same comprehensive tax obligations as other companies in that country. Branches are not legal entities, and are regarded as non-resident taxpayer in the country where they are established, and they only bear limited tax obligations. The profit and loss of the branch company should be merged with the head office, that is, the "consolidated statement". China's tax law also stipulates that there are two forms of income paid by subsidiaries of the company: one is to declare and pay taxes; First, it is merged into the head office to collect taxes. The form of tax payment depends on the nature of the company's branches-whether they are taxpayers of enterprise income tax.