FAQQ&A Regarding the Tax Policies Related To The Headquarters And Branches
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Is it necessary to pay value-added tax and corporate income tax for the transfer of goods between headquarters and branches? |
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Value added tax: Taxpayers who have two or more branches and implement unified accounting, transfer goods from one branch to other branches for sales, should be considered as selling goods, except for those whose relevant branches are located in the same county (city). Corporate income tax: When a company transfers assets between its head office and its branches (except for transferring assets overseas), as the ownership of the assets remains unchanged in legal form and substance, it can be treated as an internal disposal asset and not deemed as sales, no revenue is recognized. The tax basis for related assets continues to be calculated.
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Is the second level branch that is treated as an independent taxpayer, entitled to enjoy the preferential income tax policies for small and micro profit enterprise when paying tax? |
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The current corporate income tax adopts a legal person tax system, and enterprises should calculate and pay corporate income tax with the legal person as the main body. Therefore, if an enterprise establishes a branch without legal personality, it should summarize and calculate the number of employees, total assets, and annual taxable income of the head office and its branches, and then judge whether it meets the conditions for small and micro profit enterprises based on the total number of various indicators. Second level branches that are considered as independent taxpayers for tax payment do not have legal personality and cannot enjoy preferential income tax policies for small and micro profit enterprise.
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Do all second level branches need to share corporate income tax locally? |
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A second level branch refers to a branch established by a tax paying enterprise in accordance with the law and obtaining a non-legal person business license (registration certificate), and the head office directly conducts unified accounting and management of its finance, business, personnel, etc. The headquarters and second level branches with main production and operation functions shall share and pay enterprise income tax locally. The following second level branches do not share and pay corporate income tax locally:
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In the first quarter of 2024, the corporate income tax prepayment declaration was using the December 2023 financial report data to calculate the three factors to apportion tax amount. Can the corresponding amount be adjusted during the audit in May, and the tax amount apportioned based on three factors be recalculated based on the audited amount during the prepayment declaration in the second quarter of July? |
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If the branch's operating income, employee salaries compensation, and total assets data used by the head office for the first time calculating the apportioned tax within a tax year are inconsistent with the data confirmed by Chinese certified public accountants after auditing, no adjustment will be made.
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The competent tax authority in the location of a second level branch shall conduct tax inspections on the second level branch on its own and shall make up for the tax (including late fees and fines, the same below). How should it be handled? |
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The second level branch should allocate 50% of the supplementary income tax to the head office for payment, and 50% to the second level branch for processing and payment locally. Therefore, this tax inspection is not related to other second level branches and is only shared between the second level branch under tax inspection and its head office. |
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Is it necessary to maintain consistency in the approval period of corporate income tax types for the headquarters and branches? |
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Corporate income tax is prepaid on a monthly or quarterly basis and is subject to specific approval by the competent tax authority in the location of the head office. Therefore, branch offices should be consistent with the head office. |
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