Tax-related processing on the capital surplus and retained earnings into capital


Company increases its registered capital, there are two main ways: First, to absorb foreign capital, including the increase in new shareholders or former shareholders of additional investment, the second is the capital reserve, surplus reserve into capital or retained earnings into capital which The second increase the capital of the way: the capital reserve into capital, surplus capital reserves and retained earnings to increase capital, should be in the tax law tax treatment? Always troubled by the finance staff of many companies, tax cadres and fiscal intermediaries personnel, so that the majority of fiscal staff to clarify the tax-related processing of capital surplus and retained earnings into capital, the author of this tax laws to sort out , and then to put forward their tax approach.

(Retained earnings into capital tax-related processing

The company's retained earnings is reflected in the corporate surplus reserves and retained earnings, retained earnings into capital mainly refers to the surplus reserve transfer of capital and undistributed profits into capital two cases in the current Companies Act regime, the general surplus The reserve is divided into two: First, the statutory surplus reserve and the company's statutory surplus reserve in accordance with the after-tax profit of 10% extraction, the statutory surplus reserve accumulated amount reached 50% of the registered capital can no longer extract the two is arbitrary Community Chest. any Community Chest extraction in accordance with the resolution of the shareholders' meeting. statutory surplus reserve and discretionary Community Chest difference lies in its respective provision according to different national laws or administrative regulations. the former is based on extraction, the latter by the company the discretion of the extract.

The main function of the surplus reserves include the following: (1 compensate for the loss, (2 expanding the production and management, (3 to increase the company's capital is worth noting that the statutory surplus reserve into capital, the remainder of the fund shall not be less than the increase by transferring 25% of the registered capital of the former company of its tax-related processing as follows:

1, the surplus reserve into capital tax-related processing


(1 processing of the personal income tax: to pay personal income tax

According to the State Administration of Taxation notice >> << on the capital stock of joint-stock enterprises and bonus shares Exemption of Individual Income Tax (Guo Shui Fa [1997] No. 198 provides that: The joint-stock enterprises with surplus reserve to distribute bonus shares is dividends, bonuses and the nature of the allocation individual to obtain the amount of the bonus shares, personal income tax rate of 20%, according to the State Administration of Taxation about the surplus reserve transferred to the registered capital of the personal income tax approved >> (Guo Shui Han [1998] No. 333, the company extracted from the statutory surplus reserve and discretionary reserve fund from after-tax profit increase by transferring registered capital, in fact, the company will be allocated the surplus reserve to its shareholders dividends, bonuses, shareholders and then to the dividends, bonuses and increase the registered capital, belong to the individual shareholders share and re-enter the personal income tax (increase by transferring part of registered capital project should be in accordance with the "interest, dividends, bonuses.

(2 Enterprise Income Tax Treatment: Free Enterprise Income Tax

From the taxed profits of the statutory provident fund and any provident fund to increase by transferring the registered capital, in fact, the company will be allocated the surplus reserve to its shareholders dividends, bonuses, shareholders and then to the dividends, bonuses and increase the registered capital. Enterprise Income Tax Law of the People's Republic of China >> Article 26 stipulates: "The following income is tax-free income: (dividends, bonuses and other equity investment gains between the two qualified resident enterprises," the PRC on Enterprise Income Tax Implementation of the Law Ordinance, Article 83 stipulates: "resident enterprise meet the conditions referred to in Article 26 (two of the Enterprise Income Tax Law, dividends, bonuses and other equity investment gains, refers to the resident enterprises investing directly in other resident enterprises obtain return on investment. Enterprise Income Tax Law, Article 26 (two (three alleged dividends, bonuses and other equity investment gains, excluding continuous held by resident enterprises publicly issued and traded the stock of less than 12 months to obtain return on investment. Therefore, if the shareholder is a legal person or company, the surplus reserve into capital of the invested enterprise, corporate shareholders in accordance with the investment increase in the proportion of part of registered capital is free of corporate income tax.

2, the undistributed profits into capital tax treatment of


(A personal income tax treatment: to pay personal income tax

Notice >> << State Administration of Taxation on further strengthening the high-income individual income tax collection and management (Guo Shui Fa [2010] 54: Strengthening the dividend, the dividend income tax collection and management. Focus on strengthening the Corporation to pay dividends, the dividend deduction payment of the tax administration, distribution of dividends, overseas listed companies must strictly enforce the existing provisions of the Exemption of Individual Income Tax. strengthen Enterprise Zhuanzeng registered capital and equity management, undistributed profits, surplus reserves and in addition to the share premium issued other than capital reserve into registered capital and equity, in accordance with the "interest, dividends, bonuses and" project, personal income tax levied in accordance with existing policies and regulations. In other words, the regulations only require enterprises to "In addition to the stock issued at a premium other capital surplus "conversed registered capital is subject to personal income tax
Therefore, if the shareholder is a natural person, the substance of the undistributed profits of the invested enterprise to increase the capital after the first allocation of investment processing, individual shareholders pay personal income tax.

(Corporate income tax: Free Enterprise Income Tax

If the shareholder is a legal person or company, the undistributed profits of the invested enterprises into capital in real terms is also first be allocated after the investment, after-tax profit of corporate shareholders from investment-resident enterprises in accordance with the provisions of the PRC on Enterprise Income Tax Law >> the dividends and the dividend is free of corporate income tax undistributed profits into capital, the corporate shareholders in accordance with the investment increase in the proportion of part of registered capital is free of corporate income tax.

(Two capital reserve into capital tax treatment of

1, the processing of the personal income tax


According to the notice of the State Administration of Taxation on the capital stock of joint-stock enterprises and Exemption of Individual Income Tax bonus shares >> (Guo Shui Fa [1997] 198, the provisions of the capital reserve, with the equity premium into capital, does not belong to the dividend. dividend distribution of nature, to increase the capital amount of the individual to obtain, not as personal income, no personal income tax should be noted that, according to the << State Administration of Taxation on the former urban credit cooperatives in the conversion process of urban cooperative banks personal shares of value-added income to individual income tax approved >> (Guo Shui Han [1998] No. 289 of the Law: Guo Shui Fa [1997] No. 198 document called "capital reserve" refers to the formation of the stock issued at a premium income of joint-stock enterprises. capital fund. this the amount of capital stock by an individual and not as taxable income to personal income tax and do not conform to the capital fund allocation of part of personal income, personal income tax shall, according to the << Company the provisions of the law >>, in the form of shares of China's enterprises, including two kinds of organization of the Corporation and limited liability companies.

Therefore, in addition to capital formation by the limited liability corporation, the capital (share premium reserve into registered capital, the natural person shareholder is not subject to personal income tax, such as funding transferred to foreign currency translation, other capital surplus transferred increased capital shall be according to "interest, dividends, bonuses and projects in accordance with the rate of 20% levied a personal income tax.

Limited liability company A, for example, set up by the A, B, C three natural investment, the investment ratio of 5:3:2 in order to expand the total capital, decided to use the corporate surplus reserve and capital reserve into capital. Accounting treatment is as follows:

By: surplus reserves - statutory surplus reserve 600,000

Capital reserve - capital premium 300 000

Credit: the paid-up capital - A 450 000

Paid-in capital - B 270 000

Paid-in capital - C 180 000

The requirements were calculated A, B, C taxable personal income tax.

Analysis:

In accordance with the provisions of the document Guo Shui Fa [1997] No. 198, the joint-stock enterprises do not belong to capital reserves for dividends, bonus nature of the distribution, the amount of individuals to acquire the capital stock, as personal income, no personal income tax, joint-stock enterprise surplus reserve to distribute bonus shares as dividend bonus nature of the distribution of the individual to obtain the amount of bonus shares should be taxed as personal income, therefore,

Taxable personal income tax, shareholders of A = 600 000 × 50% × 20% = 60000 (yuan)

Individual income tax shareholder B = 600 000 × 30% × 20% = 36 000 ($)

Individual income tax shareholders of C = 600 000 × 20% × 20% = 24 000 ($)

Company A of the above taxes by distributing bonus shares to be withheld.
Case:
Co., Ltd. one of the original registered capital of 30 million yuan, shareholders (both natural persons and 10 million yuan per person, three years later, the other shareholders invested 20 million yuan of shares, increase the registered capital of 10 million shares when the capital surplus of 10 million , followed by the capital surplus of 10 million increase by transferring the registered capital of 12.5 million each, like this case, the original three shareholders increase of 2.5 million yuan of registered capital to levy personal income tax?

Analysis:

Journal of Corporate Accounting Standards Guide >> (the 2006 regulations, the receipt of investor capital contributions beyond their share in registered capital or equity investment in a capital premium (or share premium shall be credited to capital surplus.

According to the notification >> << State Administration of Taxation on the joint-stock enterprise capitalization and distribution of bonus shares Exemption of Individual Income Tax (Guo Shui Fa [1997] No. 198 provisions, the joint-stock enterprises do not belong to dividends, capital reserves for distribution of dividend nature individuals to acquire the capital stock amount as personal income, no personal income tax.

According to the << State Administration of Taxation on the former urban credit cooperatives in the conversion of value-added income of the individual shares in the process of urban cooperative banks approval >> of the individual income tax (Guo Shui Han [1998] No. 289 stipulates that the State Administration of Taxation [1997] No. 198 file called "capital reserve" refers to the joint-stock enterprise stock issued at a premium income of the capital reserve. this, the amount of capital stock by an individual, not as taxable income personal income tax. Share Free paper Download Center business process in http://eng.hi138.com
profit and retained earnings of the business owner's interest, but not transferred to the paid-up capital, new investors to share this part of retained earnings, should also be to pay more than certain investment ratio of capital contributions. Therefore, the new shareholders contributed in excess of its registered capital of 10 million yuan in part as a capital premium, should be a compensation for the old shareholders.

In summary, the capital reserve replenishment, the replenishment part of the natural person shareholder, should be used as taxable income, personal income tax. The three shareholders to increase 250 million yuan of registered capital to levy personal income tax.

2, the enterprise income tax treatment


(A capital premium of capital reserve into capital, are exempt from corporate income tax

Notice >> << State Administration of Taxation on Enterprise Income Tax Law to implement a number of tax issues (Guo Shui Han (2010) No. 79, Article IV: "the invested enterprise to equity (vote premium on the capital reserve into share capital , as the investing enterprise's dividend, dividend income, investing enterprise shall not increase the tax basis of the long-term investment, based on this provision, the company formed by equity (premium ticket capital reserve to capital investment enterprises are not handled as a taxable or tax-exempt income of the corporate income tax, therefore, does not exist for investment in both the corporate income tax payments and withholding problem. the formation of capital capital premium reserve into the capital tax revenue is recognized, natural not payment of corporate income tax, of course, can not increase the tax cost of long-term equity investment of the investors.

Case:
A December 31, 2011 the company's total share capital of 200 million shares as the base, to all shareholders for every 10 shares were distributed to 1.00 yuan (including tax allocation, for a total distribution of profits of 20 million company to 31 December 2011 The Japanese company's total share capital of 200 million base capital reserve 8 shares per 10 shares to all shareholders (including equity (ticket premium of capital reserve into share capital of two shares, 1.6 million of the total capitalization of capital reserve shares of the resident enterprise shareholders entitled to 60% of the total share capital, set up offices in the domestic non-resident enterprise shareholders entitled to 40% of the total share capital.

Analysis:

Options (premium ticket capital reserve into share capital, not recognized as a dividend, or 200 ÷ 10 × 2 = 40 million, as the investing enterprise dividends, dividend income, according to the State Administration of Taxation (2010) 79 shall pay enterprise income tax, the resident enterprise shareholders should confirm the dividend yield of 20 × 60% + (160-40 × 60% = 84 million (exemption of corporate income tax, non-resident enterprise shareholders dividends of 20 × 40% + ( 160-40 × 40% = 56 million yuan (exemption of corporate income tax).

(Two four categories can not be converted into capital, capital surplus into capital, you need to pay corporate income tax [1]

Of the PRC on Enterprise Income Tax Law of the implementation of the provisions of Article 56 of the Ordinance: "enterprises of various assets, including fixed assets, biological assets, intangible assets, long-term prepaid expenses, investment assets, inventories, historical cost tax basis of historical cost referred to in the preceding paragraph, the actual cost of the enterprises of the asset. hold the assets during the asset value or impairment, in addition to finance, taxation under the State Council department in charge can be recognized gains and losses outside shall not adjust the tax basis of assets, showing the assets are held during the value-added are "unrealized gains", only because of the need of accounting measurement, its value added temporarily included in capital surplus, recognized gains and losses, nor increase tax base, value-added part of the pending disposal of assets, income truly achieve before being recognized gains and losses.

The following four scenarios is the capital surplus generated by the added value of all their assets in the holding period, before the disposal of assets, the "capital surplus" belongs to the owner's equity can not use tax law and accounting are not recognized gains and losses, according to accounting standards provisions can only be carried forward in the asset disposal gains and losses can not be converted into capital. If the enterprise in violation of the provisions into capital, can be regarded as the companies ahead of the assets' value-added part of the "disposal", the recognized gains and to pay corporate income tax.

The first category, using the equity method of accounting for long-term equity investments due to owners' equity of the invested party is in addition to the net profit or loss arising from changes in capital surplus.

Journal of Accounting Standards for Enterprises No. 2 - the long-term equity investment >> provides that: "The long-term equity investments accounted for using the equity method, the investment unit owners' equity in addition to the net profit or loss and other changes, the pro rata calculation shall enjoy share credited to capital surplus, the disposal of the investment should be part of the original owners' equity ratios of the respective transferred to profit or loss ", showing that the capital reserve can not be converted into capital, can only be disposed of when transferred to the investment income credited to the share transfer pay enterprise income tax.

For example: A business investment B enterprises, holds a 20% stake .2011 Firm B held available for sale financial assets at fair value increase of 10 million yuan, then A stake increase the carrying value of long-term equity investment 200 million transferred to the investment income, while increasing the capital reserve of 200 million according to the above requirements, A, 200 million of capital reserve can not be converted into capital until the enterprise disposal of the investment. A business of 200 million capital capital reserves, they should pay enterprise income tax.

The second category, available for sale financial assets in the balance sheet date the fair value is greater than the carrying value of the difference between the capital reserve.

No. 50 of China Securities Regulatory Commission <accounting issues consultation letter> reply >> (Accounting Department [2008) provides that: "available for sale financial assets, changes in fair value gains or losses, except for impairment losses and exchange differences on foreign currency monetary financial assets, it should be recognized directly in equity (other capital reserve in the relevant laws and regulations have clearly defined, included in the part of the changes in fair value of other capital surplus, temporary shall not be used increase by transferring shares to fair value measurement of assets, changes in fair value of proceeds, temporary shall not be used for the distribution of profits. "provisions of the capital surplus should be credited directly to owners' equity (capital reserve). clearly defined in the relevant laws and regulations, this part of the difference between the temporary shall not be used to increase capital.

Press the cases: B companies available for sale financial assets at fair value increase of 10 million yuan, according to the provisions should be included in capital surplus, the capital reserve into capital and the distribution of profits.

The third category, the occupied real estate or inventory is converted to investment property measured at fair value model, the conversion date fair value is greater than its book value of the difference between the capital reserve.

<< Accounting Standards for Enterprises No. 3 - Investment Real Estate >> The capital reserve should be transferred to profit or loss when you dispose of the investment real estate, it may not be used to increase the capital.

For example: a developer will not yet for sale office space for foreign rental, the cost of the commercial housing for 10 million yuan, the fair value of 15 million yuan. This business belongs to the inventory is converted to investment property measured at fair value model in accordance with the provisions of Accounting Standards, the difference 500 million into capital reserves, in the office of the transfer or disposal of net profits or losses.

The fourth category, the capital surplus generated by the difference between the Reclassification of Financial Assets.
Out of the financial asset is disposed of in accordance with the provisions of the Journal of Accounting Standards for Enterprises No. 22 - Financial Instruments Recognition and Measurement >> through profit or loss financial assets are disposed of shall not be converted into capital.

For example: a company held-to-maturity investments of 10 million yuan, according to the relevant provisions of the re-classified as fair value measurement of available for sale financial assets, reclassification date fair value of 12 million yuan, the difference 200 million included in the capital of public product, the capital surplus can not be converted into capital, pending the disposal of assets through profit or loss.

(3 if you should be included in income, profits part of the error included in the "capital reserve", conversed should first be processed in accordance with the accounting errors, adjust the amount of taxable income and pay the enterprise income tax.

For example: a company accepting donations to a tax of 10 million yuan worth of fixed assets, the assets are included in the "capital surplus" accounting treatment in accordance with the provisions of the new accounting standards should be included in operating income, so enterprises should be accounting errors be adjusted to increase current profits, according to the provisions of Article 6 of the Enterprise Income Tax Law, to accept the donation income should be included in taxable income, the capital reserve into capital required in accordance with the accounting error to adjust the increase should be Taxable income 10 million yuan, the payment of enterprise income tax of 2.5 million yuan (assuming that the corporate tax rate of 25% and increase the capital of 750 million.

(Three capital surplus and retained earnings into capital stamp duty treatment

According to the relevant provisions of the Stamp Act, stamp duty, the tax basis of the tariff lines of business books for the total amount of the paid-up capital "and" capital surplus "two, the rate is five ten thousandths, if in subsequent years, the paid-up capital" and the total amount of capital reserve two, the increase in subsidies for printing. Therefore, the actual work will surplus reserves payment of registered capital should be on its new registered capital of part stamp duty.

References:

[1] cited since Xuyong Guo: << capital reserve into capital to pay tax >> <China Tax News> November 8, 2011. Share in the free paper download center http://eng.hi138.com

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