Q:
|
Does enterprise need to pay stamp duty for loan contract signed with non-financial institutions?
|
A:
|
According to China’s Provisional Regulations on Stamp Duty, the originator of the loan contract is the taxpayer. “Loan contract” means contract signed between bank/financial institutions and the borrower (not including inter-bank offered credit). It is unnecessary to pay stump duty for enterprises who sign a loan contract with non-financial institutions, for example, enterprise group.
|
Q:
|
Does it need to pay stamp duty for signing a loan extension contract?
|
A:
|
According to Notice on Explanations and Provisions of Stamp Duty issued by Chinese State Administration of Taxation, loan extension contract that only stating deferred payment terms is not required to pay stamp duty.
Therefore, there is no need to pay stamp duty for extended loan contract.
|
Q:
|
Can the input VAT of service fees paid for interest be credited against output VAT?
|
A:
|
According to Notice on Provisions on Business Tax Reform and Value-added Tax Pilot issued by Chinese Ministry of Finance and State Administration of Taxation , the input VAT of service fees relating to loan service and associated investment & financing consultation fees, handling fees are not allowed to offset against output VAT.
Therefore, the input VAT of interest is not allowed to be credited against output VAT even though enterprise has already got special VAT invoices, and the input VAT should be transferred out.
|
Q:
|
Can interest income of “unified loan and return” enjoy VAT exemption?
|
A:
|
According to Notice on Comprehensive Trial to Replace Business Tax with Value-added Tax issued by Chinese Ministry of Finance and State Administration of Taxation, if the enterprise group/the core enterprise of the group and affiliated finance company charge interest to enterprise group or subordinate units, the VAT of interest income will be exempted on condition that the interest rate is no higher than the loan rate that paid to financial institutions or the coupon rate of a bond. However, if the interest rate of “unified loan and return” is higher than that paid to financial institutions or the coupon rate of a bond, the interest income is required to pay VAT in full amount.
Therefore, if the enterprise group charge interest to subsidiary companies with interest rate higher than that paid to financial institutions or the coupon rate of a bond, the interest income needs to pay VAT in full amount.
|
Q:
|
Does the free loan of funds between units inside enterprise group need to be regarded as sale and pay VAT?
|
A:
|
According to Notice on VAT Exemption for Retirement Organization and other Regulations issued by Chinese Ministry of Finance and State Administration of Taxation, the free loan of funds between units inside enterprise group (including inter-enterprise groups) can enjoy VAT exemption.
|
Q:
|
Is interest income recognized on the actual date of acquisition?
|
A:
|
According to Regulations of the People's Republic of China on the Implementation of Enterprise Income Tax Law, the interest income is required to be recognized based on the interest payable date in loan contract and pay enterprise income tax.
|
Q:
|
Can interest fee be deducted before calculation of enterprise income tax on cash basis?
|
|
A:
|
According to Regulations of the People's Republic of China on the Implementation of Enterprise Income Tax Law, the taxable income should be calculated on accrual basis. Income or expenses of current period should be recognized whether they have been collected or paid; On the contrary, income or expenses belong to other periods should not be recognized in current period even though they have been collected or paid.
Therefore, the interest expense should be apportioned among the loan periods instead of being deducted in full amount even if the charges have been paid in a lump sum.
|
FAQ
