FAQQ&A Regarding Enterprise Income Tax (1)
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Q： |
How is rental income recognized based on the Enterprise Income Tax Law? |
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A： |
Rental income is recognized based on the date when the lessee pays rent as stipulated in the contract.
The rental income obtained by enterprises from providing the right to use fixed assets, packaging materials, or other tangible assets shall be recognized on the date specified in the transaction contract or agreement when the lessee is required to pay rent. Among which, if the transaction contract or agreement stipulates that the lease term is cross year end and the rent is paid in advance in a lump sum, according to the matching principle of income to expense, the lessor can evenly allocate the confirmed income to the relevant year within the lease period. If the lessor, who is a non-resident enterprise that has not established institutions and premises within China, is declaring and paying enterprise income tax based on factual transactions, the provisions of this article shall also apply. |
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Q： |
Can the expenses incurred by enterprises in accepting external labour dispatch be deducted before enterprise income tax? |
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A： |
The actual expenses incurred by the enterprise in accepting external labour dispatch should be deducted before tax according to regulations in two situations: the expenses directly paid to the labour dispatch company according to the agreement (contract) should be treated as labour service expenses; The expenses directly paid to employees should be treated as salary and employee welfare expenses. The expenses under salary expenses are allowed to be included in the base of the total salary of the enterprise, as the basis for calculating the deduction of other related expenses. |
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Do non-resident enterprises need to pay enterprise income tax when transferring domestic land use rights? |
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If a non-resident enterprise transfers domestic land use rights within China without establishing an institution or premise in China, or if it establishes an institution or premise in China but obtains income from transferring land use rights that is not actually related to its established institution or premise in China, the remaining balance of the total income obtained from transferring land use rights after deducting the tax basis should be used as the income for calculating and paying enterprise income tax on land use rights transfer, and the withholding agent should withhold and pay it on behalf of the non-resident enterprise at the time of payment. |
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Q： |
How should non-resident enterprises calculate and pay enterprise income tax when engaging in international transportation business within China? |
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Non-resident enterprises that have completed tax registration in accordance with regulations should set up accounting books in accordance with the Tax Administration Law and relevant laws and regulations, keep accounts based on legal and valid vouchers, accurately calculate the taxable income, and declare and pay enterprise income tax to the competent tax authority in the place where the tax registration is located in accordance with the law, either on their own or by entrusting an agent. The income obtained by non-resident enterprises engaged in international transportation business shall be determined based on the provisions of the Enterprise Income Tax Law, and the taxable income shall be determined by deducting the actual and reasonable expenses related to the income obtained from the total income. The total income refers to the total passenger and freight income obtained by non-resident enterprises from transporting passengers, goods, or mail to and from ports within China. Passenger transportation income includes ticket income, as well as excess baggage transportation costs, meals, insurance, service, and entertainment expenses; Freight income includes basic freight and various surcharges. If non-resident enterprises are unable to accurately calculate and declare their taxable income based on facts, the competent tax authority shall, in accordance with the Notice of the State Administration of Taxation on Issuing the Management Measures for the Verification and Collection of Income Tax on Non-Resident Enterprises (State Taxation Administration) {2010}19, determine the taxable income according to the regulations. |
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Q： |
Should the resident representative office of foreign enterprises declare enterprise income tax based on factual transactions or on the basis of the determination of the competent tax authority? |
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Representative offices should set up accounting books in accordance with relevant laws, administrative regulations, and the provisions of the finance and tax authorities of the State Council. They should keep accounts based on legal and valid vouchers, conduct accounting, and accurately calculate their taxable income according to the principle of matching their actual functions and risks. Within 15 days from the end of each quarter, they should declare and pay enterprise income tax to the competent tax authority based on facts, And according to the tax payment deadline stipulated in the Provisional Regulations of the People's Republic of China on Value Added Tax and its implementation rules, declare and pay value-added tax truthfully to the competent tax authority. For representative offices whose accounting books are not sound, unable to accurately calculate income or cost expenses, and unable to declare accurately, the tax authorities have the right to determine their taxable income. |
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