"Free loans" are not handled properly, be careful that the tax bureau comes to your door, and come to learn important knowledge points with the editor!
01
A related party borrowed 1 billion yuan without compensation and was investigated!
Notice of tax matters of the State Administration of Taxation
Tax Pass [2024] *** number
Technology Co., Ltd. (Taxpayer Identification Number: 9***D):
Subject matter: After verification, it was found that your unit lent the company's funds to other affiliated enterprises from 2019 to 2022, with a total amount of 1,008,757,447.31 yuan, and failed to declare value-added tax, surcharge and enterprise income tax.
Basis: Article 14 of the Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of Replacing Business Tax with Value-Added Tax (CS [2016] No. 36), Article 5 of the Notes on Sales Services, Intangible Assets and Immovable Properties in the Annex, Article 41 of the Enterprise Income Tax Law of the People's Republic of China and other relevant policies and regulations.
Paragraph 1 of Article 25 of the Law of the People's Republic of China on the Administration of Tax Collection stipulates that "taxpayers must truthfully file tax returns and submit tax returns, financial accounting statements and other tax payment materials required by the tax authorities according to actual needs in accordance with the provisions of laws and administrative regulations or the declaration deadline and content determined by the tax authorities in accordance with the provisions of laws and administrative regulations".
The content of the notice: If your unit lends funds to other affiliated enterprises, VAT and surcharge shall be levied according to the loan service, and the enterprise income tax shall be calculated and paid; You are limited to 10 days from the date of receipt of this notice, and go to the tax bureau to truthfully handle the tax declaration. If the application is not done within the above-mentioned time limit, the tax authorities will deal with it in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection.
The State Administration of Taxation *** District Taxation Bureau *** Tax Office
June 26, 2024
02
Is it legal to borrow without interest between enterprises?
For the sake of capital turnover and enterprise development, it is very common for companies to borrow from each other, and most of them will agree on interest, but there are also many enterprises that borrow without interest.
So, is the interest-free loan contract between enterprises valid?
According to the current Contract Law, a contract is valid as long as the following conditions do not exist:
(1) One party concludes a contract by fraud or coercion, harming the interests of the state;
(2) Malicious collusion to damage the interests of the state, the collective or a third party;
(3) concealing an illegal purpose in a lawful form;
(4) Harming the public interest;
(5) Violating the mandatory provisions of laws and administrative regulations.
Therefore, it is possible to sign interest-free loan contracts between enterprises!
So, what taxes do companies need to pay when signing interest-free loan contracts? At this time, it is necessary to look at the nature of the enterprises of both parties, and second, to see the relationship between the borrower and the borrower!
03
What are the tax-related risks of gratuitous borrowing?
1. Value-added tax
Policy basis: Cai Shui [2016] No. 36, Cai Shui [2019] No. 20, Ministry of Finance and State Administration of Taxation Announcement [2021] No. 6.
Therefore, except for special circumstances, gratuitous loans should be treated as sales if they are VAT, and they are not treated as sales, which violates the relevant provisions of VAT and has VAT risks.
If a taxpayer borrows money without compensation and does not make deemed sales, the in-charge tax authorities have the right to determine the sales amount in the following order:
Note: Interest income is generally calculated according to the interest rate of similar loans of banks in the same period, and the interest income of loans is subject to VAT according to loan services, and the VAT rate of 6% is applicable.
2. Enterprise income tax risk
(1) There is a risk of tax increase in corporate income tax
Non-repayable borrowing is not in line with the arm's length principle, and the tax authorities have the right to make reasonable adjustments.
(2) For enterprises with bank loans, there is a risk of tax increase in corporate interest expenses
Therefore, if an enterprise transfers a bank loan to another enterprise free of charge, the interest paid has nothing to do with the income obtained by the enterprise, and the taxable income should be increased.
3. Individual income tax risk
According to Cai Shui [2003] No. 158, if an enterprise borrows money to an individual investor free of charge, and does not return it after the end of the tax year, and does not use it for the production and operation of the enterprise, the unrepaid loan can be regarded as the dividend distribution of the enterprise to the individual investor, and the individual income tax shall be levied according to the interest, dividends and bonus income items.
Note: If a natural person borrows money to an enterprise free of charge, the natural person does not have any income and does not need to pay individual income tax.
04
Enterprises borrow money from individuals, and deal with it like this!
1. Enterprises borrow from individuals for repayment (pay interest)
1. Enterprise income tax
(1) Enterprises need to obtain invoices
If the interest expense of the enterprise to the individual exceeds the standard of "small and sporadic", the individual needs to apply for an invoice issued by the tax bureau as a pre-tax deduction voucher.
(2) Meet the requirements of debt-to-capital ratio
(3) The interest expense of operating loans incurred by the company shall not be deducted in the calculation of the taxable income of the enterprise
If the enterprise investor fails to pay up the amount of its paid-in capital within the prescribed time limit, the interest incurred by the enterprise on its external loans is equivalent to the interest accrued on the difference between the investor's paid-in capital and the amount of capital payable within the prescribed time limit, which is not a reasonable expenditure of the enterprise and shall be borne by the enterprise investor, and shall not be deducted in the calculation of the taxable income of the enterprise.
2. VAT and surcharge
When an enterprise pays interest to an individual, the individual needs to pay VAT at a rate of 1% and pay the corresponding additional tax.
Note: If the interest income of the loan obtained by an individual is less than 500 yuan/time, it is exempt from VAT.
3. Personal income tax
Interest income obtained by individuals is taxed at a rate of 20% on "dividends, interest, and bonus income". When paying the interest on individual loans, the unit shall withhold and pay individual income tax in accordance with the provisions of the tax law.
4. Stamp duty
In accordance with the provisions of the Stamp Duty Law, the loan contract signed between the enterprise and the individual is not subject to stamp duty.
2. Enterprises borrow money from individuals without compensation (no interest is paid)
Generally, there is no tax issue for both parties, but it is important to pay attention to the risks mentioned in the second part.
A map is attached for everyone to view at any time~
Source: Finance First Classroom, Tax Lecture Hall, Mei Song Lecture on Tax, Tax Desk, Tax Manager, Financial Manager