1. Relevant policies
1.《》
2. 《《 (CS [2009] No. 59)
3. (Management Measures)
4. (50% & Transfer)
5. (Collection and Administration)
6. 《《Finance [2019] No. 9)
7. Announcement No. 49 [2023] of the Ministry of Finance and the State Administration of Taxation)
2. Mind mapping
3. Tax treatment
(1) Concept
1. Debt restructuring refers to the matter in which the creditor makes concessions on the debtor's debts in accordance with the written agreement or court ruling reached between the debtor and the debtor in the event of financial difficulties.
Note: The new accounting standards do not require debt restructuring to occur in the context of "financial difficulties of the debtor" and "concessions" by creditors.
2. Parties: debtors, creditors.
3. Dominant: Debtor.
4. Restructuring date: The restructuring date shall be the effective date of the debt restructuring contract (agreement) or court ruling.
(2) General tax treatment
1. The use of non-monetary assets to settle debts shall be decomposed into two businesses: the transfer of relevant non-monetary assets and the repayment of debts at the fair value of non-monetary assets, and the income or loss of relevant assets shall be recognized.
2. In the event of a debt-to-equity swap, it shall be decomposed into two businesses: debt repayment and equity investment, and the income or loss from debt repayment shall be recognized.
Note: The new accounting standard no longer distinguishes between gains and losses on debt restructuring and gains and losses on asset disposal, and is consolidated as profit or loss related to debt restructuring.
3. The debtor shall recognize the income from debt restructuring according to the difference between the debt repayment amount paid and the tax basis of the debt, and the creditor shall recognize the debt restructuring loss according to the difference between the debt repayment amount received and the tax basis of the creditor's rights.
4. In principle, the relevant income tax matters of the debtor remain unchanged.
Case: Company A used the inventory of goods with a book cost of 160,000 yuan and a market price of 200,000 yuan excluding tax to offset the debt of 246,000 yuan owed to B, and issued a special VAT invoice according to the regulations, and the tax amount indicated on the special invoice was 26,000 yuan.
A needs to confirm the deemed sales income = 20-16 = 40,000 yuan, and recognize the debt restructuring income = 24.6-20-2.6 = 2 (10,000 yuan);
B needs to confirm the loss of debt restructuring = 24.6 - (20 + 2.6) = 2 (10,000 yuan).
(3) Special tax treatment
1. Conditions that need to be met at the same time
(1) It has a reasonable commercial purpose and does not have the main purpose of reducing, exempting or deferring the payment of taxes.
(2) The original substantive business activities of the restructured assets shall not be changed within 12 consecutive months after the reorganization of the enterprise.
(3) The original major shareholders who have obtained equity payments in the reorganization of the enterprise shall not transfer the equity obtained within 12 consecutive months after the reorganization.
Note: The original major shareholders refer to the shareholders who originally held more than 20% of the equity of the transferred enterprise or the acquired enterprise. "Within 12 consecutive months after the reorganization" means the 12 consecutive months from the date of the reorganization.
2. The equity payment part of the transaction can be subject to special tax treatment according to the following provisions:
(1) The taxable income recognized by the debt restructuring of the enterprise accounts for more than 50% of the taxable income of the enterprise in the current year, and can be evenly included in the taxable income of each year within the period of five tax years.
(2) In the event of a debt-to-equity swap business, the income or loss from debt repayment and equity investment shall not be recognized for the time being, and the tax basis of the equity investment shall be determined by the tax basis of the original creditor's rights. Other relevant income tax matters of the enterprise remain unchanged.
Fourth, case analysis
(1) Repayment of debts with non-monetary assets
Suppose Company A owes Company B RMB 2 million, and repays it with equity with a book value of RMB 1 million and a fair value of RMB 1.75 million.
1. Accounting treatment of debtor company A
Debit: Accounts payable 200
Credit: Long-term equity investment 100
Return on investment 75
Other gains – Debt restructuring gains 25
Assuming that 250,000 yuan accounts for more than 50% of the annual taxable income, it can be included in the taxable income in 5 years, and 50,000 yuan can be included in each year.
2. Accounting treatment of creditor company B
Borrow: Long-term equity investment 175
Return on investment 25
Credit: Accounts receivable 200
For non-debt-to-equity swaps, Company B can confirm a debt repayment loss of 250,000 yuan.
3. Caution
(1) The consideration to be paid must be equity, if it is non-equity such as inventory, fixed assets, etc., it cannot enjoy special restructuring and cannot be deferred;
(2) Only when the taxable income recognized by debt restructuring accounts for more than 50% of the taxable income of the enterprise in the current year, can the tax be deferred.
(3) The proceeds from debt restructuring (250,000 yuan in this example) can only be deferred, and the income from asset transfer (750,000 yuan) cannot be deferred.
(2) Debt-to-equity swaps
Suppose that Company A owes Company B RMB 2.8 million, and uses 1 million ordinary shares of the Company to offset the debt, with a stock market price of RMB 2 per share and a par value of RMB 1 per share, assuming that it meets the conditions for special tax treatment.
1. Accounting treatment of debtor company A
Debit: Accounts payable 280
Credit: Share capital 100
Capital reserve – 100 share capital premium
Other gains – Debt restructuring gains 80
Debt-to-equity swap does not recognize the income from debt repayment, and the taxable income should be reduced by 800,000 yuan in this question, which is a permanent difference.
2. Accounting treatment of creditor company B
Borrow: Long-term equity investment 200
Return on investment 80
Credit: Accounts receivable 280
The tax basis of equity investment is determined by the tax basis of the original creditor's right of 2.8 million, and the loss of debt settlement is not recognized, and the tax is increased by 800,000 yuan at the time of declaration, and the book value of 2 million yuan is less than the tax base of 2.8 million, which is a deferred income tax asset.
Year-end income tax accounting:
Debit: Deferred tax assets 80*25%=20
Credit: Income Tax Expense – Deferred 20
3. Caution
(1) It is a temporal difference for creditor company B, assuming that the equity will be sold for 3 million yuan in the future, according to the book value of 2 million, the disposal income will be 1 million, and according to the tax basis of 280, the disposal income will be 200,000 yuan, and the creditor's restructuring loss will be deferred.
(2) It is a real tax exemption for the debtor Company A, not a deferred tax payment, and the debtor's income from debt repayment is permanently exempt from tax.
(3) The debt-to-equity swap must be offset by one's own equity.
5. Comprehensive cases
On August 31, 2014, Ankang Company sold a batch of medical equipment to Yimin Co., Ltd. (hereinafter referred to as Yimin Company), with a total sales price (including VAT) of 35.1 million yuan. The parties agreed that the payment would be made after three months. Three months later, Yimin Company was unable to repay the arrears on time due to difficulties in capital turnover. On December 10, 2014, Yimin Company and Ankang Company agreed to carry out debt restructuring, and the relevant information is as follows:
1. Yimin Company paid 1.6 million yuan in bank deposits of Ankang Company.
2. Offset the debt of 8 million yuan with a batch of products produced by Yimin Company, the book value of the batch of products is 5 million yuan, the fair value is 6 million yuan, and the value-added tax is 1.02 million yuan.
3. 5,000,000 ordinary shares of Yimin Company were used to offset the remaining debts, with a market price of 3.5 yuan per share and a par value of 1 yuan per share.
4. On December 31, 2014, Yimin Company went through the approval procedures for the relevant capital increase and issued a certificate of capital contribution to Ankang Company.
Thought:
1. The debt restructuring of Ankang Company and Yimin Company, explaining what conditions need to be met if the matter is to be subject to special tax treatment in terms of taxation.
2. It is assumed that the restructuring meets the conditions for special tax treatment under the tax law. At this time, how should the corporate income tax treatment be carried out.
Analysis:
1. The following three conditions shall be met at the same time for the special tax treatment of debt-to-equity swaps:
(1) It has a reasonable commercial purpose and does not have the main purpose of reducing, exempting or deferring the payment of taxes.
(2) The original substantive business activities of the restructured assets shall not be changed within 12 consecutive months after the reorganization of the enterprise.
(3) The original major shareholders who have obtained equity payments in the reorganization of the enterprise shall not transfer the equity obtained within 12 consecutive months after the reorganization.
2. When the reorganization complies with the special tax treatment under the tax law, the income tax treatment of Ankang Company and Yimin Company is as follows:
(1) For the part of the debt to be repaid with a bank deposit of 1.6 million yuan, Ankang Company and Yimin Company do not need to confirm the income or loss;
(2) For the part of repaying debts with products, firstly, Yimin Company recognized the transfer income of 1 million yuan according to the transfer of assets, and at the same time, Yimin Company recognized the debt restructuring gain of 980,000 yuan, that is, (800-600-102) yuan, and Ankang Company recognized the debt restructuring loss of 980,000 yuan;
(3) For the debt-to-equity swap part, Ankang Company and Yimin Company do not recognize the income or loss of debt repayment and equity investment for the time being, and the debtor Yimin Company shall increase the registered capital according to the tax basis of the original debt of 25.5 million yuan (i.e., 3510-160-800), and the tax basis of the equity investment of the creditor Ankang Company shall be determined by the tax basis of the original creditor's right of 25.5 million yuan.
Source: Xiaoying Yan Tax. 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!