In order to meet the needs of expanding the scale of production and operation, enterprises often need to set up some branches, and what are the relevant tax declaration and tax issues after the establishment of branches?
01How to declare and pay stamp duty on the business account books of branches operating across regions?
According to the (1988) Guo Shui Di Zi No. 25), "the business account books used by branches operating across regions shall be subject to stamp duty by each branch in its location. Stamp duty shall be levied on the account books of branches of higher-level units that have allocated funds, and stamp duty shall not be levied on the business account books of branches of higher-level units that have not allocated funds. In order to avoid double taxation of the same fund, the account book of the superior unit recording the funds shall be subject to stamp duty on the remaining part after deducting the amount of funds allocated to the subordinate institutions. ”
02Do all secondary branches need to share corporate income tax locally?
According to Article 5 of the Announcement No. 57 of the State Administration of Taxation in 2012, "the following second-level branches shall not pay enterprise income tax on the spot:
(1) The second-level branches that do not have the main production and operation functions and do not pay value-added tax and business tax in the local area shall not be assessed and paid enterprise income tax on the spot for after-sales service, internal research and development, warehousing and other auxiliary internal tax payment enterprises.
(2) If it is identified as a small and low-profit enterprise in the previous year, its second-level branches shall not pay enterprise income tax on the spot.
(3) The newly established second-level branches shall not be assessed and paid enterprise income tax on the spot in the year of establishment.
(4) The second-level branch that is revoked in the current year shall not pay the enterprise income tax on the spot from the period of enterprise income tax prepayment on the date of cancellation of tax registration.
(5) The second-level branches established by the tax-paying enterprises outside China without legal person status shall not be assessed and paid on the spot. ”
03 If my company establishes a branch with independent accounting in other places, should it independently calculate and declare and pay enterprise income tax on the spot?
If a resident enterprise establishes a branch office without legal personality across regions within the territory of China (i.e., across provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan), the resident enterprise is a cross-regional enterprise operating a consolidated tax payment enterprise, and unless otherwise specified, the provisions of Announcement No. 57 [2012] of the State Administration of Taxation shall apply to the collection and administration of enterprise income tax (unified calculation, hierarchical management, local prepayment, summary liquidation, and financial adjustment). Therefore, whether the branch is independently accounted for does not affect the summary payment of income tax.
04Can a branch independently enjoy the income tax reduction and exemption policy for small and low-profit enterprises?
At present, the enterprise income tax system is implemented as a corporate person, and the enterprise shall calculate and pay the enterprise income tax with the legal person as the main body. Paragraph 2 of Article 50 stipulates that "if a resident enterprise establishes a business establishment within the territory of China that does not have the status of a legal person, it shall calculate and pay enterprise income tax on a consolidated basis". Since the branch does not have the status of a legal person, its operation should be incorporated into the head office of the enterprise, and the head office of the enterprise shall calculate the tax payable and enjoy the relevant preferential policies.
Therefore, when an enterprise establishes a branch that does not have the status of a legal person, it should first summarize and calculate the number of employees, total assets and annual taxable income of the head office and its branches, and then judge whether it meets the conditions of a small and low-profit enterprise based on the sum of each index.
05 How to deal with the enterprise income tax that has been prepaid and prepaid by the branch in the previous quarter if it did not meet the conditions of small and low-profit enterprises in the last quarter, and met the conditions of small and low-profit enterprises in the current quarter according to the existing regulations?
If the aggregate tax paying enterprise does not meet the conditions of small and low-profit enterprises in the previous quarter, and meets the conditions in this quarter, the tax prepaid by its head office and secondary branches can be deducted from the enterprise income tax payable in the following quarters according to the provisions of the "Announcement No. 6 of 2023 of the State Administration of Taxation".
06 If the head office is set up in Shanghai and the branch office is set up in the preferential tax area for the development of the western region, can the branch separately enjoy the preferential enterprise income tax policy for the development of the western region?
It can be enjoyed
According to Article 6 of the Announcement No. 12 of 2012 of the State Administration of Taxation, the preferential tax rate of 15% shall be determined only for the income of an enterprise with its head office located outside the preferential tax area for the development of the western region, and its branches established in the preferential areas (excluding branches below the third level established only in the preferential areas) shall be determined and applied to the income of the branches. When determining whether the branch meets the preferential conditions, it is only determined whether the main business income of the branch meets the "Catalogue of Encouraged Industries in the Western Region" and the proportion of its main business income in its total income. The calculation of the taxable income and the payment of income tax of the enterprise shall be carried out in accordance with Article 16 of Guo Shui Fa [2008] No. 28 and Article 2 of Guo Shui Han [2009] No. 221.
07 The head office is set up in Shanghai, and the branch office is set up in the Hainan Free Trade Port, can the branch separately enjoy the preferential enterprise income tax policy of the Hainan Free Trade Port?
It can be enjoyed
According to the provisions of the "Cai Shui [2020] No. 31) and the "Announcement No. 4 of the Hainan Provincial Taxation Bureau of the State Administration of Taxation", for enterprises with headquarters outside the Hainan Free Trade Port, only the branches located in the Hainan Free Trade Port (excluding the branches below the second level established outside the Hainan Free Trade Port and the branches below the third level established in the Hainan Free Trade Port) meet the prescribed conditions, and 15% will be applied The tax rate is not included in the scope of judgment for head offices and branches located outside the free trade port.
08How to go through the procedures for final settlement and payment of cross-regional operation summary tax enterprises?
According to Article 10 of the Announcement No. 57 of the State Administration of Taxation in 2012, the aggregate tax paying enterprise shall, within 5 months from the date of the end of the year, be summarized and calculated by the head office and each branch within 5 months from the date of the end of the year, deduct the tax paid in advance by the head office and each branch, calculate the tax refund payable by the head office and branches, and calculate the enterprise income tax payable and refundable by the head office and branches respectively in accordance with the tax apportionment method stipulated in these measures. If the enterprise income tax paid in advance in the tax year is less than the enterprise income tax payable for the whole year, the enterprise income tax payable shall be settled by the head office and the branch office respectively within the final settlement period;
09 If the second-level branch of the enterprise income tax is ready to be cancelled, should the branch file quarterly and annual enterprise income tax in advance before the cancellation?
According to the provisions of Article 5, Item 4 of the Announcement No. 57 of the State Administration of Taxation in 2012, the second-level branches that were cancelled in the current year shall not pay the enterprise income tax on the spot from the prepayment period of the enterprise income tax on the date of cancellation of tax registration. "From the date of deregistration" refers to the date on which the tax authorities accept the application for deregistration. Therefore, branches that pay taxes in aggregate do not need to file corporate income tax returns in advance.
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