Q:
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When should the final settlement of enterprise income tax be proceeded?
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A:
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A normally operated enterprise should proceed final settlement of enterprise income tax within 5 months from the end of the year; enterprises that terminate in the middle of a year are required to proceed the final settlement within 60 days from actual termination date.
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Q:
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Can the severance compensation be calculated as the base of 3 expenses in final settlement of enterprise income tax?
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A:
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Employee’s welfare, labour union expenditure and education expenditure can be deducted at a certain rate based on the total salary amount in final settlement of enterprise income tax. However, the termination benefit paid by the employer for dissolution of the labour contract is excluded in total salary amount. Therefore, the one-off severance compensation is not allowed to be the base of 3 expenses in final settlement of enterprise income tax.
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Q:
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Can the additional taxable income based on tax bureau’s investigation make up the losses?
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A:
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According to Notice on Making up the Losses with Additional Taxable Income from Investigation issued by State Administration of Taxation, if there are deficits of previous years that can be made up according to Enterprise income Tax Law, the additional taxable income that investigated by tax bureau is allowed to make up the deficits.
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Q:
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Will policy-based relocation period with cease operation be regarded as the years of making up losses?
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A:
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According to Notice on Management Measures on Enterprise Income Tax for Policy-based Relocation issued by State Administration of Taxation, if an enterprise has losses of previous years and with no income due to the policy-based relocation, then the cease operation period is allowed to be reduced from the statutory loss carry-over years. If an enterprise’s relocation period without stopping the production, then the loss carry-over years should be calculated continuously.
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Q:
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Will the establishment period be regarded as loss year?
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A:
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According to Notice on Implementation of Enterprise Income Tax issued by State Administration of Taxation, the year in which an enterprise commences the operation is the year in which the profits and losses are calculated. The expenses incurred during preparatory period before actual operation are not allowed to be recorded as losses of current period. Therefore, the establishment period is not allowed to be regarded as loss year.
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Q:
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Will the overdue fine for late payment of social insurance need to be adjusted as an increase in enterprise income tax payment?
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A:
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Only tax overdue fine is not allowed to be deducted before calculation of enterprise income tax. Therefore, the overdue fine for late payment of social insurance is unnecessary to be adjusted in final settlement of enterprise income tax.
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FAQ
