introduce
Notice of State Taxation Administration of The People's Republic of China, Ministry of Finance of People's Republic of China (PRC) on Some Specific Issues Concerning Land Value-added Tax (Cai Shui [1995] No.48) (hereinafter referred to as Document No.48) stipulates: "III. On the issue of tax exemption for enterprise merger and transfer of real estate: in enterprise merger, if the merged enterprise transfers real estate to the merged enterprise, the land value-added tax will be temporarily exempted. " According to the above regulations, in order to avoid the land value-added tax in the process of real estate transfer, enterprises often transfer real estate by means of equity transfer. However, this paper holds that according to the characteristics that land value-added tax is generated with circulation and adopts four-level progressive tax rate, the land value-added tax temporarily exempted in the previous link will be supplemented in the subsequent transaction link, and the transfer of real estate equity can not really achieve the purpose of saving tax costs.
Firstly, the relevant provisions of land value-added tax on the transfer of real estate by equity transfer are sorted out.
Since 1994, China has implemented the Provisional Regulations on Land Value-added Tax in People's Republic of China (PRC) (the State Council Order [1993]No. 138) to collect land value-added tax. Land value-added tax refers to a tax paid by units and individuals to the state on the basis of the income obtained from the transfer of the right to use state-owned land, above-ground buildings and their attachments, including monetary income, physical income and other income. The object of taxation refers to the value-added amount obtained by the paid transfer of the right to use state-owned land and the property rights of buildings and other attachments on the ground.
For the transfer of real estate in the process of enterprise merger, according to the provisions of No.48 document, the land value-added tax can be temporarily exempted. At that time, it coincided with the wave of state-owned enterprise reform in the mid-1990s, and a large number of small state-owned enterprises were merged by large state-owned enterprises or well-run private enterprises. The state stipulates that the real estate transfer in enterprise merger is temporarily exempted from land value-added tax, which is an encouraging measure for enterprise merger. (1) However, during the implementation of Circular 48, a large number of enterprises or individuals encountered the problem of transferring real estate by means of equity transfer. In 2000, the local tax of Guangxi Zhuang Autonomous Region asked State Taxation Administration of The People's Republic of China for instructions. The Reply of State Taxation Administration of The People's Republic of China on the Issue of Collecting Land Value-added Tax on the Transfer of Real Estate in the Name of Equity Transfer (No.687 [2000] of the State) has been received. "Request for instructions on levying land value-added tax on real estate transfer in the name of equity transfer" (No.32 [2000] of Guangxi Local Taxation News) has been received. In view of the fact that Shenzhen Energy Group Co., Ltd. and Shenzhen Energy Investment Co., Ltd. have transferred 0/00% equity of Shenzhen Energy (Qinzhou) Industrial Co., Ltd./KLOC-at one time, and the assets in the form of these equity are mainly land use rights, above-ground buildings and attachments, they should be taxed according to the provisions of land value-added tax.
According to the reply, the transfer of real estate in the name of equity transfer should be taxed in accordance with the provisions of land value-added tax. But this document has two problems: one is its own effectiveness, and the other is the definition of the behavior regulated by this document.
1. Guoshuihan [2000] No.687 is a document that People's Republic of China (PRC) State Taxation Administration of The People's Republic of China replied to the Local Taxation Bureau of Guangxi Zhuang Autonomous Region, and it has legal effect on the Local Taxation Bureau of Guangxi Zhuang Autonomous Region and the cc organ. However, whether other tax authorities encounter the same situation has always been controversial. According to the relevant administrative regulations and Guo Shui Fa [2004] 132, the letter of Guo Shui belongs to the departmental normative document and has certain legal effect, ranking behind the tax law, administrative regulations and departmental rules. Reply is a document used to reply to the matters requested by the lower authorities. Therefore, strictly speaking, Circular 687 has legal effect only on the matters required by the tax authorities, and also on the copying authorities, but other tax authorities can also choose to refer to the same matters. At present, tax authorities all over the country have different opinions on the implementation of this document, some refer to it, and some do not follow it. (1) The competent tax authorities have the right to choose whether to implement it or not.
Second, the reply is only based on the case, and the definition standard of applicable situation is not given. For example, will multiple transfers in a certain period be considered as "one-off"? /kloc-Can the transfer of shares below 0/00% be exempted? How to define the "main" of "assets in the form of equity are mainly land use rights, above-ground buildings and attachments"? In 2006, the Ministry of Finance of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China issued regulations to regulate the preferential treatment of land value-added tax under the circumstances that the validity of the document is not clear and the behavior regulated by the document is not clear. According to the Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China, on Several Issues Concerning Land Value-added Tax (Caishui [2006] No.21), "V. On the issue of tax exemption for real estate investment or joint venture: if land (real estate) is used as a share for investment or joint venture, all the invested and joint venture enterprises are engaged in real estate development, or real estate development enterprises invest or joint venture with commercial houses built by them, The provisions of Article 1 of the Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China on Some Specific Issues Concerning Land Value-added Tax (Caishuizi [1995] No.048) shall not apply. " However, this document only clarifies the content of tax exemption for real estate investment or joint venture in Article 1 of Caishui [1995] No.48, while the content of tax exemption for cooperative housing construction and enterprise merger and transfer of real estate in the new document is not included. In other words, the provisions in No.48 on temporary exemption from land value-added tax for enterprises' merger and transfer of real estate are still valid. Then, in the case of relevant examination and approval in 2000, why didn't Caishui [2006] No.21explicitly exclude this behavior of "transferring real estate in the name of equity transfer" from the case of "temporary exemption from expropriation" in No.48 document? Based on the analysis of the nature of land value-added tax and the provisions of China's tax law on land value-added tax in equity transfer, it is considered that the above behavior can not achieve the purpose of saving tax costs.
Secondly, the characteristics of land value-added tax and the analysis of tax preferences enjoyed by equity transfer.
(1) Land value-added tax is generated with "circulation", and the four-level progressive tax rate is applicable.
Land value-added tax is an important means for the state to macro-control the real estate industry. According to the provisions of Articles 4 and 6 of the Provisional Regulations on Land Value-added Tax, the "value-added" in land value-added tax can simply describe the income obtained for the transfer of real estate, after deducting the price paid for the land use right and the cost of developing land according to law. The "value-added" here occurs in the circulation link, and the tax burden it bears can be passed on. That is to say, if it is tax-free in the previous link (because it meets the preferential conditions such as the principle of "necessary funds for tax payment"), it must be filled in the next link or levied when there is income. The tax calculation formula of land value-added tax can be simply expressed as: tax payable = value-added amount × applicable tax rate-deduction item amount × quick deduction coefficient, where land value-added amount = real estate transfer income-designated deduction item amount. The deduction items of land value-added tax mainly include the amount payable for land use right, real estate development cost, real estate development cost and all other taxes and fees related to real estate transfer, including business tax, stamp duty and other taxes and fees paid when transferring real estate. Among these deductions, the amount payable for land use rights accounts for a large proportion. In the case of transferring real estate to obtain a certain income, if the cost of obtaining land use right is high, the deduction will increase and the land appreciation will be low, on the contrary, the land appreciation will be high. At the same time, the land value-added tax is subject to a four-level progressive tax rate, that is, the value-added amount does not exceed 50% of the deducted project amount, and the tax rate is 30%; The tax rate is 40% for the part whose value-added exceeds 50% of the deducted project amount and does not exceed 100% of the deducted project amount; If the added value exceeds 100% of the deducted project amount and does not exceed 200% of the deducted project amount, the tax rate is 50%; For the part exceeding 200%, the tax rate is 60%. Therefore, the higher the land appreciation, the higher the applicable tax rate may be. Therefore, in the case of a certain income from real estate transfer, the higher the cost of obtaining land use rights, the more the amount deducted, and the lower the value-added of land, the lower the applicable tax rate may be. On the other hand, if the cost of obtaining land use right is low, the value-added of land will be high, which may lead to the application of higher tax rate and excessive tax.
(2) Document No.48 stipulates that the land value-added tax in enterprise merger shall be temporarily exempted.
"Temporary exemption from taxation" is a preferential tax measure. Tax preference refers to all kinds of preferential treatment given by the state to taxpayers and tax recipients in taxation, and it is a form for the government to reduce or lighten the tax burden of taxpayers according to the predetermined purpose through the tax system. Preferential tax policies are usually implemented to achieve some economic control objectives. According to the taxpayer's ability to pay taxes, tax reduction and exemption shall be carried out according to law, so as to embody the principle of taxation according to capacity and play an encouraging and supporting role in specific industries or industries. China has established a large number of detailed provisions on the object, scope, conditions, application and approval procedures of tax preference in the tax legal system, but it has not established a systematic tax preference system. Generally speaking, tax incentives include tax reduction, tax exemption, preferential tax rate and deferred tax payment. The "temporary exemption" discussed in this paper is the tax preference of "deferred tax payment", which is also called "deferred class" in the tax system of Taiwan Province Province. Article 3 of Document No.48 stipulates: "In enterprise merger, if the merged enterprise transfers real estate to the merged enterprise, the land value-added tax will be temporarily exempted." First of all, this temporary exemption does not mean tax exemption, that is, it does not directly exempt this part of the land value-added tax. The tax exemption clause is expressed as follows: Article 5 of Document No.48 stipulates that "individuals who exchange their own residential properties may be exempted from land value-added tax after verification by the local tax authorities." Secondly, this temporary exemption is time-limited and temporary. Article 3 of Document No.48 only stipulates temporary exemption, but does not stipulate the time for subsequent collection. According to the nature of land value-added tax levied because of its circulation, we believe that the subsequent collection should take place in the next land circulation link. Because the time of the next land transfer link is uncertain, it is reasonable that the law does not stipulate a fixed period of temporary exemption. Of course, there are also tax incentives that stipulate the period of temporary exemption. For example, the first paragraph of Article 19 bis of the Regulations of Taiwan Province Province on Promoting Industrial Upgrading stipulates: "Individuals or profit-making enterprises who subscribe for shares at the price of all their patents or specialized technologies may choose to postpone the payment of income tax for five years."
From the above analysis, it can be seen that the third article of Document No.48 only stipulates that the land value-added tax is temporarily exempted, which does not mean that this part of the tax is directly exempted. At the same time, the temporary tax concession period will last until the next land transfer.
Three, the common case analysis of real estate equity transfer
Company A is a real estate development company with paid-in capital of 50 million yuan. In 20 12, company a obtained the land use right by auction and paid the land transfer fee of 30 million yuan. The plot plans to invest 60 million yuan to develop non-ordinary residential projects. In the year of 20 13, Company A invested150,000 yuan in the development cost of this project, with a period cost of 2 million yuan. Later, due to financial reasons, it is impossible to develop, and it is planned to transfer the project under construction to company B for 85 million yuan. The company has no other business. In order to reduce taxes and fees, Company A requires to transfer the project by means of equity transfer. Before the transaction, the two companies calculated the two trading methods (the income tax rate of both companies is 25%, unit: ten thousand yuan).
(A) the transaction link tax calculation
1. Taxable amount in the form of equity transfer
2. Taxable amount of direct transfer of real estate.
As can be seen from the two calculation tables, the transfer of real estate by equity transfer is less taxable than the direct transfer of real estate.
(2) Taxable amount of subsequent development and sales
Real estate will inevitably transfer in the subsequent operation of enterprises. Suppose that Company B invested 75 million yuan to continue the construction after the transferee, and the cost during the period was 8 million yuan. The sales income is 260 million yuan, all from non-ordinary residential projects.
1. When the last link is carried out in the form of equity transfer,
The tax payable in this link is mainly the land value-added tax in the transfer of equity and real estate.
Land value-added tax on the transfer of real estate by means of equity transfer
2. When the last link is transferred by transferring real estate.
This link is mainly about the land value-added tax when the tax payable is directly transferred to the real estate.
Land value-added tax on the transfer of real estate by means of equity transfer
(C) Two development links of tax analysis
In view of the continued development of the sales link after the transferee, the tax amount of the two links before and after the transaction by means of equity transfer is 719600 yuan, while the tax amount of the direct transfer of real estate is 5810.7000 yuan. Among them, the tax difference is mainly caused by the land value-added tax, and the transfer of equity is 9.29 million yuan more than the direct transfer of real estate. It can be seen that the transfer of real estate by means of equity transfer can not actually save taxes and fees. Real estate transactions are temporarily exempted from paying land value-added tax by means of equity transfer. As a result, the overall strength can provide the necessary material basis for financial processing process reengineering. Secondly, the financial processing flow of enterprises should attach importance to "people-oriented". The optimization of financial processing flow will change the established system and flow, and improve the current situation that internal control management depends entirely on human control. However, from the traditional business philosophy of our country, enterprises need to combine the rule of law with the rule of man organically and be flexible, because the optimization of financial processing flow is only a management means. Whether this method is effective depends mainly on whether this management method can effectively improve work efficiency, rather than sticking to procedures.
(C) pay attention to the effective prevention of financial risks
With the deepening of China's socialist market economy construction, especially after China's entry into WTO, the change of economic environment will be more uncertain. In such an environment, risks exist in all aspects of enterprise production and operation activities. In the financial management of enterprises, the first thing to face is the response to financial risks. Financial risks mainly include transaction risks, industry risks and market risks. The optimized financial processing flow must include the financial risk assessment mechanism and attach importance to the identification and response of financial risks of enterprises. Enterprises should establish a perfect risk prevention mechanism, change the traditional management mode of dealing with risks afterwards, and conduct risk assessment at different stages before, during and after the event through risk identification, evaluation, reporting and response, so as to effectively change post-event management into dynamic management and promote enterprises to realize real-time management of financial information as soon as possible. In addition, enterprises can also build a dynamic financial risk management process by implementing supply chain management, comprehensive budget management, building information management platform and risk control system, thus reducing the probability of risk occurrence and improving the risk management level of enterprises.
Third, the conclusion
Generally speaking, the optimization of financial processing flow is a systematic work, involving a wide range, and it is difficult to do it overnight. It is unrealistic for some enterprise financial management workers to hope to completely optimize the unit financial processing flow through certain measures, and it is also a serious misunderstanding of the optimization of financial processing flow. Objectively speaking, there is a big gap between China and foreign countries because of the short development time of financial process reengineering and optimization. Therefore, Chinese enterprises should integrate theory with practice, grasp the key to optimize the financial processing flow, and help enterprises improve their market adaptability and enhance their market competitiveness.
References: [1] He Ying. The New Trend of Enterprise Financial Process Reengineering: Finance * * * Enjoy Service [J]. Accounting Newsletter, 20 10, (6).
[2] Tan Zhili. Exploring the mechanism of bionic financial process reengineering [J]. Accounting, 20 10, (7). (Author: Song)