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Q：
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What does donation income include?
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A：
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According to Article 21 of the Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China (Order No. 512 of the State Council of the People's Republic of China), "The income received from donations referred to in Article 6 (8) of the Enterprise Income Tax Law refers to the monetary or non-monetary assets that the enterprise receives from other enterprises, organizations, or individuals without compensation.”
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Q：
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When is donation income recognized?
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A：
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Donation income is recognized on the actual date of receipt of donated assets.
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Q：
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Does the fair value change of corporate financial assets need to be included in the taxable income for paying corporate income tax?
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A：
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According to Article 56 of the Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China (State Council Decree No. 512), all assets of an enterprise, including fixed assets, biological assets, intangible assets, long-term deferred expenses, investment assets, inventory, etc., are taxed based on historical cost. Historical cost refers to the actual expenses incurred by an enterprise when acquiring the asset. If the assets increase in value or decrease in value during the period when an enterprise holds them, the tax base of the assets shall not be adjusted except for those that are allowed to be recognized as gains or losses by the financial and tax authorities of the State Council. Therefore, the fair value changes of corporate financial assets do not need to be included in the taxable income to pay corporate income tax.
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Q：
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Do newly established secondary branches need to declare corporate income tax?
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A：
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According to Article 5 of the Announcement of the State Administration of Taxation on Issuing the Measures for the Administration of Enterprise Income Tax Collection for Cross regional Business Summary Taxation (Announcement No. 57 of the State Administration of Taxation in 2012), the following secondary branches shall not share and pay corporate income tax locally:
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Secondary branches that do not have the main production and operation functions and do not pay value-added tax or business tax locally, which play function as product after-sales service, internal research and development, warehousing, and other auxiliary function within the enterprise, do not share and pay corporate income tax locally.
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For small and micro profit enterprises recognized in the previous year, their second level branches will not share and pay corporate income tax locally.
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The newly established secondary branch shall not share and pay corporate income tax locally in the year of establishment.
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The secondary branch that was revoked in the current year shall not share and pay enterprise income tax locally from the date of handling the cancellation of tax registration during the period of corporate income tax prepayment.
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Secondary branches established by tax paying enterprises outside of China without legal personality shall not share and pay corporate income tax locally.
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Q：
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What are the conditions for small and micro profit enterprises now?
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A：
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Small and micro profit enterprises refer to enterprises engaged in industries that are not restricted or prohibited by the state, and meet three conditions: annual taxable income not exceeding 3 million yuan, number of employees not exceeding 300, and total assets not exceeding 50 million yuan. For those who start or terminate business activities in the middle of the year, the actual operating period shall be used as a tax year to determine the relevant indicators mentioned above. The determination of small and micro profit enterprises shall be based on the annual reconciliation and settlement results of corporate income tax.
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FAQ
