Notice of tax administrative penalties from the Inspection Bureau of the Yunfu Municipal Taxation Bureau of the State Administration of Taxation
Cloud Tax Audit Penalty Notice [2024] No. 7
Wu**( Taxpayer Identification Number: 440723********0058) :
In accordance with Article 8 of the Law of the People's Republic of China on the Administration of Tax Collection, Articles 44, 63 and 64 of the Administrative Punishment Law of the People's Republic of China, the relevant matters are hereby notified as follows:
1. The factual and legal basis of the tax administrative penalty and the proposed penalty decision:
On April 11, 2019, you declared and paid stamp duty of RMB 1,680.00 and personal income tax of RMB 168,000.00 according to the equity transfer price of RMB 3,360,000.00, and the contract provided in the declaration was a contract signed on October 15, 2018. The contract stipulates that you will transfer 60% of the equity of Taichang Company to Lin Moujian at a price of 3.36 million yuan, Shen Mouming will transfer 20% of the equity of Taichang Company to Lin Moujian at a price of 1.12 million yuan, and Shen Mouming will transfer 20% of the equity of Taichang Company to Yang Moucong at a price of 1.12 million yuan.
After inspection, the real price at which you transferred your 60% stake in Taichang in 2018 was RMB 10,200,000.00, and the details are as follows:
1. Pay less stamp duty
According to Article 1 of the Provisional Regulations of the People's Republic of China on Stamp Duty (Decree No. 11 of the State Council), "the units and individuals who write and receive the certificates listed in these Regulations within the territory of the People's Republic of China are all taxpayers of stamp duty and shall pay stamp duty in accordance with the provisions of these Regulations." Article 2 "The following vouchers are taxable vouchers: 2. Documents for the transfer of property rights;" and Article 3 "Taxpayers shall calculate the tax payable according to the proportional tax rate or the fixed amount of each item according to the nature of the taxable vouchers. The determination of the specific tax rate and tax amount shall be carried out in accordance with the "Stamp Duty Item and Tax Rate Table" attached to these Regulations. "Stamp Duty Items and Tax Rates Table": 11. Property rights transfer documents include property ownership and copyright, trademark exclusive right, patent right, know-how use right and other transfer documents, land use right transfer contract, land use right transfer contract, commercial housing sales contract, according to the amount of 0.5‰ decal. Article 7 "The taxable certificate shall be affixed at the time of writing or receiving. Article 8 "If the same voucher is signed by two or more parties and each holds a copy, each party shall affix the full amount of the copy they hold." Article 5 of the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Stamp Duty ((1988) Cai Shui Zi No. 255) "The documents for the transfer of property rights mentioned in Article 2 of the Regulations refer to the documents established for the sale, inheritance, gift, exchange, and division of the property rights of units and individuals. Article 16 "The document for the transfer of property rights shall be affixed by the legislator, and if it is not affixed or less stamped, the holder of the document shall be responsible for subsidizing the stamping." If the written instrument is signed by way of a contract, the parties in possession of the written instrument shall respectively affix the full amount. Notice of the State Administration of Taxation on the Interpretation and Provisions of Several Specific Issues Concerning Stamp Duty (Guo Shui Fa (1991) No. 155) Article 10 "The scope of taxation of the transfer of 'property ownership' is as follows:
Documents for the transfer of ownership of movable and immovable property registered by the government management authority, as well as documents for the transfer of enterprise equity. You shall declare a stamp duty of RMB 5,100.00 (10,200,000.00*0.05%), a declared stamp duty of RMB 1,680.00 and a stamp duty payable of RMB 3,420.00 (5,100.00-1,680.00) for the transfer of shares.
2. Pay less personal income tax
According to Article 1 of the Individual Income Tax Law of the People's Republic of China, "Individuals who have a domicile in China, or who have no domicile and have resided in China for one year, shall pay individual income tax in accordance with the provisions of this Law on income derived from within and outside China." Article 2 "Individual income tax shall be subject to the following items of personal income: 9. Income from transfer of property;" Article 3 "Tax rate of individual income tax: 5. Income from royalties, interest, dividends, bonuses, income from property lease, income from transfer of property, incidental income and other income shall be subject to a proportional tax rate of 20 percent. Article 6 "Calculation of Taxable Income: 5. Income from the transfer of property shall be the balance of the income from the transfer of property after deducting the original value of the property and reasonable expenses. Article 8 "For individual income tax, the income earner shall be the taxpayer, and the unit or individual that pays the income shall be the withholding agent." Article 8 of the Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China states that "the scope of individual income mentioned in Article 2 of the Tax Law: (9) Income from property transfer refers to the income obtained by individuals from the transfer of securities, equity, buildings, land use rights, machinery and equipment, vehicles and ships, and other property. Article 19 "The original value of property mentioned in Item 5 of Paragraph 1 of Article 6 of the Tax Law refers to: (1) the purchase price of securities and the relevant expenses paid in accordance with the provisions at the time of purchase;" and Article 20 "The reasonable expenses mentioned in Item 5 of Paragraph 1 of Article 6 of the Tax Law refer to the relevant expenses paid in accordance with the provisions when selling property." Article 22 "The income from the transfer of property shall be calculated and taxed according to the balance of the income from the one-time transfer of property after deducting the original value of the property and reasonable expenses." Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Individual Income Tax on Income from Equity Transfer of < (Trial) > (Announcement No. 67 of 2014 of the State Administration of Taxation) Article 2 "Equity referred to in these Measures refers to the equity or shares of natural person shareholders (hereinafter referred to as individuals) invested in enterprises or organizations established in China (hereinafter collectively referred to as "invested enterprises, excluding sole proprietorship enterprises and partnerships"). Article 3 "Equity transfer referred to in these measures refers to the transfer of equity by an individual to other individuals or legal persons, including the following circumstances: (1) sale of equity;" Article 4 "The transfer of equity by an individual shall be the taxable income after deducting the original value of the equity and reasonable expenses from the income from equity transfer, and individual income tax shall be paid according to the income from property transfer. Reasonable expenses refer to the relevant taxes and fees paid in accordance with the regulations when the equity is transferred. Article 5 "The individual income tax on the income from the transfer of individual equity shall be the taxpayer of the equity transferor and the transferee shall be the withholding agent. Article 7 "Income from equity transfer refers to cash, in-kind, negotiable securities and other forms of economic benefits obtained by the transferor as a result of equity transfer. Article 15 "The original value of the equity transferred by an individual shall be determined in accordance with the following methods: (1) The original value of the equity obtained by way of cash contribution shall be determined according to the sum of the actual price paid and the reasonable taxes and fees directly related to the acquisition of the equity. Article 20 "Under any of the following circumstances, the withholding agent or taxpayer shall declare and pay taxes to the in-charge taxation authorities within 15 days of the following month in accordance with the law: (1) the transferee has paid or partially paid the equity transfer price; (2) The equity transfer agreement has been signed and taken effect; (3) The transferee has actually performed its duties as a shareholder or enjoyed the rights and interests of a shareholder;" If you transfer the equity you enjoy, you shall truthfully declare and pay individual income tax according to the income from the transfer of property.
During the inspection, Shen Mouming said that during the operation period, the shareholders of Taichang Company successively paid the company's employee salaries, mountain rents and other expenses on behalf of Taichang Company, and Taichang Company has been in the process of preparation, and there is no operating income, and these expenses belong to the shareholders' claims against Taichang Company, which are included in the equity transfer and should be deducted from the transfer income, and provide an explanation that Taichang Company did not establish account books in the early days of its establishment, and the record of the early investment expenditure of Tianwo Stone Farm was not standardized. According to the details of the initial investment expenses of Tianwo Stone Quarry provided by Shen Mouming, the investment of each shareholder in Taichang Company (including the capital invested by shareholders in the company and the claims against Taichang Company formed by paying expenses on behalf of Taichang Company) was 9,100,719.51 yuan. According to the relevant evidence provided by Shen Mouming, Wu Mouyong, and you in the court, such as the "Shareholders' Inputs and Expenditures", which were jointly signed and confirmed by the three people, it can be confirmed that the investment expenses and income of the three people to Taichang Company are apportioned according to the proportion of equity. After apportionment, the capital invested by you and the expenses on behalf of the company are RMB 3,363,979.91. After investigation, in 2018, 30% of the 60% equity of Taichang Company transferred by you was transferred from Wu Mouyong, and the actual transfer price was 3,700,000.00 yuan (2,900,000.00 + 800,000.00), and 3,700,000.00 yuan should be included in the original value of the equity according to the regulations, and it was allowed to be deducted when calculating the income from property transfer.
(1) On April 25, 2015, you issued a "Letter of Arrears" confirming that you owed Wu Mouyong RMB 2,900,000.00 for the equity transfer, and settled it together with the two people's transactions. On April 16, 2015, Wu Mouyong, Shen Mouming and you signed the "Yun'an County Taichang Mining Co., Ltd. Equity Transfer Contract", agreeing to transfer 30% of the shares held by Wu Mouyong to Taichang Company for 1,260,000.00 yuan, and transfer 5% of the equity to Shen Mouming for 210,000.00 yuan. On the same day, Wu Mouyong and you signed another "Yun'an County Taichang Mining Co., Ltd. Equity Transfer Contract", stipulating that you will transfer 60% of the equity of Taichang Company to Wu Mouyong for 420,000.00 yuan. On April 16, 2015, Wu Mouyong actually transferred 20% of the equity he held in Taichang Company to you, and Wu Mouyong still held 10% of the equity of Taichang Company (held by you). Therefore, the price for the 20% equity transferred to you by Wu Mouyong is 2,900,000.00 yuan.
(2) On August 9, 2018, Wu Mouyong transferred 10% of the equity of Taichang Company held by you to you for RMB 800,000.00.
The stamp duty payable on the transfer of equity in the amount of $5,100.00 shall be included in the reasonable expenses paid on the sale of the equity and shall be allowed to be deducted in the calculation of the income from the transfer of property. Therefore, the individual income tax on the income from property transfer should be paid 458,184.02 yuan [(10,200,000.00-3,363,979.91-3,700,000.00-5,100.00)*20%-168,000.00].
The above facts are supported by the following evidence:
1. Equity registration and filing materials, judgments and evidentiary materials, and industrial and commercial registration materials to prove that you conceal the real income of equity transfer and are suspected of providing false equity transfer prices for tax declaration.
2. "Declaration Details Inquiry", proving that you have paid stamp duty of RMB 1,680.00 and personal income tax of RMB 168,000.00.
3. Bank transfer records provided by Taichang to prove that you have realized the income from the real equity transfer.
4. The details of the input cost of Taichang Company's Tianwo Stone Quarry provided by Shen Mouming prove that it is the original cost of Taichang Company's Tianwo Stone Quarry.
5. The explanation provided by Shen Mouming proves that the equity transfer money paid by Lin Moujian includes the expenses paid by the shareholders on behalf of Tianwo Stone Farm (the shareholders' claims against the company) Taichang Company did not set up account books for accounting at the initial stage, and these expenses were not recorded, and Taichang Company has not been operating normally and has not obtained income before the equity transfer.
According to the first paragraph of Article 63 of the Law of the People's Republic of China on the Administration of Tax Collection, the Guangdong Provincial Taxation Bureau of the State Administration of Taxation <广东省税务系统规范税务行政处罚裁量权实施办法>on the amendmentArticle 6 of the Announcement (Announcement No. 2 [2021] of the Guangdong Provincial Taxation Bureau of the State Administration of Taxation) stipulates that your act of underpaying individual income tax of RMB 458,184.02 and stamp duty of RMB 3,420.00 in 2018 by making false tax declarations in the form of a yin-yang contract is tax evasion, and the degree of illegality is "ordinary". Since you can cooperate with the inspection and confirm the relevant illegal facts, it is proposed to impose a fine of 0.5 times the underpayment of tax for your tax evasion, i.e. a personal income tax fine of RMB 229,092.01 and a stamp duty fine of RMB 1,710.00.
2. You have the right to make statements and defenses. Please go to our bureau to make a statement or defense or provide a statement or defense materials before our bureau makes a tax administrative penalty decision; if you fail to make a statement or defense within the time limit, you will be deemed to have waived your rights.
3. If you are to be fined more than 2,000 yuan (including 2,000 yuan), or other circumstances stipulated in Article 63 of the Administrative Punishment Law of the People's Republic of China, you have the right to request a hearing. An application for a hearing may be submitted in writing to our bureau within five working days from the date of receipt of this notice; failure to do so within the time limit shall be deemed to have waived the right to a hearing.
March 26, 2024
Source: Yunfu Municipal Taxation Bureau, Tax.com. The content of this article is for general information purposes only and is not intended as formal auditor, accounting, tax or other advice, and we cannot guarantee that such information will remain accurate in the future. No person should act on the basis of the information contained herein without having due regard to the relevant circumstances and obtaining appropriate professional advice. The articles reproduced in this issue are for academic exchange purposes only. The original copyright of the article or material belongs to the original author or original copyright owner, and we respect copyright protection. If you have any questions, please contact us, thank you!