1. Calculate the amount of prepaid income on a monthly or quarterly basis:
Borrowing: Income Tax
Credit: Taxes payable
Corporate income tax is payable
1. When paying quarterly income tax:
Borrow: Tax Payable - Corporate Income Tax Payable
Credit: Bank deposits
2. The annual income tax payable minus the prepaid tax before April 30 of the new year is the positive amount of tax payable:
Borrow: Prior year profit and loss adjustments
Credit: Tax Payable - Corporate Income Tax Payable
3. Pay the tax payable in the annual final settlement:
Borrow: Tax Payable - Corporate Income Tax Payable
Credit: Bank deposits
4. Redistribution of profits:
Debit: Profit distribution - undistributed profit
Credit: Prior Year Profit and Loss Adjustment
6. If the annual income tax payable is calculated to be less than the amount of tax withheld:
Debit: Tax Payable - Enterprise Income Tax Payable (Other Receivables - Overpayment of Receivables
Taxes)
Credit: Prior Year Profit and Loss Adjustment
7. Redistribution of profits:
Borrow: Prior year profit and loss adjustments
Credit: Profit Distribution - Undistributed Profits
8. Refund of overpaid tax upon review and approval by the tax authorities:
Borrow: Bank deposit
Credit: Tax Payable - Corporate Income Tax Payable (Other Receivables - Overpaid Income Tax Receivable)
9. No tax refund will be applied for the overpaid income tax amount, which will be used to offset the prepaid income tax of the next year:
Borrowing: Income Tax
Credit: Tax Payable - Corporate Income Tax Payable (Other Receivables - Overpaid Income Tax Receivable)
10. Tax-exempt enterprises should also make entries:
Borrowing: Income Tax
Credit: Tax Payable - Income Tax Payable
Borrow: Tax Payable - Income Tax Payable
Credit: Capital Reserve
Borrow: Profit for the current year
Credit: Income Tax
When an enterprise finds that it has overcharged expenses and understated earnings in the previous year, it prepares accounting entries:
Debit: Profit distribution - undistributed profit
Credit: Prior Year Profit and Loss Adjustment
Borrow: Prior year profit and loss adjustments
Credit: Tax Payable - Income Tax Payable
Summary of the deduction ratio of 12 expenses in the final settlement
Reasonable wages and salaries
Deduction Rate: 100%
That is, reasonable wage and salary expenses incurred by the enterprise are allowed to be deducted.
Employee welfare expenses
Deduction rate: 14%
That is, the part of the employee welfare expenses incurred by the enterprise that does not exceed 14% of the total wages and salaries is allowed to be deducted.
Expenditure on employee education
Deduction Rate: 8%
That is to say, the part of the employee education expenses incurred by the enterprise that does not exceed 8% of the total wages and salaries is allowed to be deducted when calculating the taxable income of the enterprise income tax, and the excess part is allowed to be carried forward and deducted in the following tax years.
Expenditure of trade union funds
Deduction Rate: 2%
That is, the part of the trade union funds allocated by the enterprise that does not exceed 2% of the total wages and salaries is allowed to be deducted.
R&D expenses
Additional deduction ratio: 75%
That is to say, if the R&D expenses actually incurred by the enterprise in R&D activities are not included in the current profit or loss as intangible assets, on the basis of deduction according to the regulations, 75% of the actual amount will be deducted before tax during the period from January 1, 2018 to December 31, 2020, and 175% of the cost of intangible assets will be amortized before tax during the above-mentioned period.
Supplementary pension insurance and supplementary medical insurance expenditures
Deduction Rate: 5%
That is: the expenses incurred by the enterprise for endowment insurance and supplementary medical insurance
Deductions are granted for the portion not exceeding 5% of the total wages and salaries.
Business entertainment expenses
Deduction ratio: 60%, 5‰
That is to say: the business entertainment expenses incurred by the enterprise shall be deducted according to 60% of the amount incurred, but the maximum shall not exceed 5‰ of the sales (operating) income of the current year.
Advertising and business promotion expenses
Deduction ratio: 15%, 30%
That is: the advertising expenses and business promotion expenses incurred by general enterprises (tobacco companies
shall not be deducted) not more than 15% of the sales (business) income of the year, quasi
The excess amount is allowed to be carried forward and deducted in subsequent tax years;
Enterprises that manufacture or sell cosmetics, pharmaceuticals, and beverages (excluding alcoholic beverages): The part of the sales (business) income not exceeding 30% of the current year shall be allowed to be deducted, and the excess part shall be allowed to be carried forward and deducted in the following tax years.
Expenditure on public welfare donations
Deduction rate: 12%
That is, the expenditure of public welfare donations incurred by the enterprise does not exceed the annual profit
The portion of 12% of the total amount is allowed to be deducted, and the excess part is allowed to be carried forward and deducted in the calculation of taxable income within the next three years.
Handling fees and commission payouts
Deduction Rate: 5%
That is to say, the handling fees and commission expenses incurred by general enterprises are allowed to be deducted if they do not exceed 5% of the amount of revenue recognized in the service agreement or contract signed with the intermediary service institution or individual with legal business qualifications (excluding the parties to the transaction and their employees, agents and representatives, etc.).
Corporate liability insurance payouts
Deduction Rate: 100%
That is, the enterprise participates in employer's liability insurance, public liability insurance and other liability insurance, in accordance with
The insurance premiums paid are allowed to be deducted before enterprise income tax.
Expenditures for the work of Party organizations
Deduction Percentage: 1%
That is to say, the part of the work expenses of the party organization that is included in the enterprise management expenses and does not exceed 1% of the total annual wages and salaries of employees can be deducted before the enterprise income tax according to the facts.
—— Xiao Cui Finance and Taxation