Can a subsidiary carry out business that the parent company does not have?

A subsidiary can carry out business that the parent company does not have, such as the business of some branches. For the detailed provisions of the tax law, please refer to the Company Law, which stipulates that a company may set up branches, which do not have the qualification of enterprise legal person, and their civil liabilities shall be borne by the company. A company may establish subsidiaries, which have the status of enterprise legal persons and independently bear civil liabilities according to law. The difference between a subsidiary and a branch is as follows: (1) A subsidiary is an independent legal person, with its own name, articles of association and organization, and carries out activities in its own name, and the creditor's rights and debts incurred in the course of operation are independently borne by itself. The branch does not have the qualification of enterprise legal person and has no independent name. Its name should be preceded by the name of the affiliated 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 an independent legal person, subsidiaries are liable for operating liabilities with all their property. Because the branch company does not have its own independent property, 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 the operation of the branch company to the extent of all its assets. (D) Measuring subsidiaries and branches from the perspective of taxation is an important form of business organization for modern large companies. Why does a company arrange some subsidiaries as subsidiaries and others as constituent companies? I'm afraid this is mainly from the perspective of tax planning, because in the increasingly fierce market competition, all legal measures that are conducive to improving the economic benefits of enterprises are the focus of enterprises' consideration, and choosing the organization form that is conducive to tax incentives is one of the important ways to achieve this goal. Countries all over the world (including China) have many different regulations on the tax treatment of subsidiaries and branches, which provides an option for enterprises or multinational companies to set up affiliated enterprises. Generally speaking, setting up a subsidiary has the following advantages: 1. Also bear limited debt liability in the host country (sometimes need the guarantee of the parent company); 2. The subsidiary only reports the enterprise results to the parent company on the production and operation activities, and the branch company reports the overall situation to the head office; 3. The subsidiary is an independent legal person, and its income tax is levied independently. Subsidiaries can enjoy the preferential tax treatment provided by the host country to their resident companies, including tax-free period, but most of the host countries are unwilling to provide more preferential treatment for subsidiaries because they are sent abroad as part of the enterprise; 4. When the applicable tax rate of the host country is lower than that of the country of residence, the accumulated profits of subsidiaries can benefit from deferred tax payment; 5. It is much more flexible for the profits of subsidiaries to be remitted back to the parent company, which means that the investment income and capital gains of the parent company can stay in the subsidiaries or be remitted back when the tax burden is light, thus obtaining additional tax benefits. 6. Many countries stipulate that withholding tax is reduced or exempted for dividends paid by subsidiaries to parent companies. Generally speaking, the advantages of setting up a branch office are: 1. Branches are generally simple to operate, and the requirements of financial accounting system are relatively simple; 2. The cost borne by the branch company may be less than that of the subsidiary company; 3. If the branch is not an independent legal person, the turnover tax shall be paid at the place where it is located, and the profits shall be collected and paid by the head office. In the initial stage of operation, branches often suffer losses, but their losses can offset the profits of the head office and reduce the tax burden; 4. The profits delivered by the branch company to the head office are usually not subject to withholding tax; 5. The transfer of funds between the branch and the head office does not involve the change of ownership, so there is no need to pay taxes. 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 generally speaking, the most important difference between the two organizational forms is that the subsidiary is an independent 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 independent legal persons, 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 independently; 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 independent taxpayers of enterprise income tax. It must be pointed out here that the combined calculation of profits of overseas branches and head offices affects the tax burden of the host country. As for the host country where the branch is located, it is often necessary to tax the income belonging to the branch itself, which is the so-called income source tax jurisdiction. However, the establishment of domestic branches does not exist this problem, and enterprises should pay attention to this point in tax planning. When a company sets up a subordinate branch, what kind of most favorable business organization form should be adopted to obtain more tax benefits? In the early stage, subordinate enterprises may lose money and set up branches. After the consolidated statements with the head office offset the profits of the head office, the taxable income and income tax can be reduced. And the establishment of a subsidiary will not get this benefit. However, if the subordinate enterprises are likely to make profits in a short time, or they can turn losses into profits quickly, it is more appropriate to set up subsidiaries, which can not only facilitate the operation of independent legal persons, but also enjoy the benefits of deferred tax payment of undistributed profits. In addition to carefully selecting the organizational form of subordinate enterprises in the initial stage of starting a business, with the business development and profit and loss changes of the whole group or subordinate enterprises, the head office also needs to adjust its subordinate branches through asset transfer and merger, so as to obtain more tax benefits in the process of enterprise operation. There is a big difference between setting up a branch and setting up a subsidiary through holding. Because the branch is not an independent legal person, its profits and losses should be combined with the head office to calculate and pay taxes, while the subsidiary is an independent legal person, and the parent and subsidiary companies should pay taxes separately. The subsidiary can only pay dividends on the shares held by shareholders in the after-tax profits. Generally speaking, if the company is profitable from the beginning, it is more advantageous to set up a subsidiary. When the subsidiary is profitable, it can enjoy various tax benefits and other business benefits provided by the local government. If the established company loses money at the initial stage of operation, it is more advantageous to set up a branch, which can reduce the tax burden of the head office. For example, at the beginning of the company's operation, the subordinate branches suffered losses, and the losses of the branches could be combined with those of the head office, so the company headquarters chose to establish the organizational form of the branches from the beginning. After several years of operation, the branch turned losses into profits. In order to enjoy the benefits of deferred tax payment, it is decided to gradually transfer the production and operation of the branch to another subsidiary, or simply merge the branch into a subsidiary. If the whole branch company is transferred to a subsidiary company, the following points must be considered: ① Whether to pay the property transfer tax, and whether there are preferential tax provisions? ② Comprehensively measure the advantages and disadvantages of subsidiaries, especially the comparison of total tax burden; (3) Assuming that the transfer of property rights is not very favorable and the production scale of the subsidiary needs to be expanded, can the ownership of the assets of the subsidiary be taken over without transfer, just for the use of the subsidiary? (4) Inventory can also be sold on a commission basis, so there is no need to pay taxes before selling on a commission basis; ⑤ For losses carried forward by branches and subsidiaries, it is particularly necessary to know the tax treatment of the country of residence and the country of source of income. Assuming that the loss of the branch can offset the profit of the head office, it is not appropriate to transfer it to the subsidiary before the branch has turned losses into profits.