Article 38 of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that the interest expenses borrowed by non-financial enterprises from financial enterprises are allowed to be deducted.
People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.34 (20 1 1) stipulates that the interest expenses of non-financial enterprises borrowed from non-financial enterprises do not exceed the amount calculated according to the interest rate of similar loans of financial enterprises in the same period, and pre-tax deduction is allowed. Financial enterprises refer to enterprises engaged in loan business with the approval of relevant government departments, including banks, finance companies, trust companies and other financial institutions.
Microfinance companies are enterprises engaged in loan business with the approval of the Financial Office of the provincial government, so the interest expenses of enterprises borrowing from microfinance companies can be deducted before tax.
Document reference: According to Article 7 of Hebei Guoshuihan [20 13]No. 16 1, can the loan interest rate between non-financial enterprises be deducted from the tax according to the interest rate of microfinance companies?
According to People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.34 (20 1 1): "The interest expenses of non-financial enterprises borrowed from non-financial enterprises shall not exceed the amount calculated according to the interest rate of similar loans of financial enterprises in the same period, and pre-tax deduction is allowed. Financial enterprises should be enterprises engaged in loan business with the approval of relevant government departments, including banks, finance companies, trust companies and other financial institutions ". Microfinance companies are enterprises engaged in loan business with the approval of the Financial Office of the provincial government, so the interest rate of loans between non-financial enterprises can be deducted from the tax.
Do enterprises need to pay stamp duty on loan contracts signed with microfinance companies?
Can the interest expenses of enterprises borrowing from small loan companies be deducted from the land value-added tax?
According to the Detailed Rules for the Implementation of the Provisional Regulations on Land Value-added Tax (Cai Fa Zi [1995] No.6), if the interest expenses in financial expenses can be apportioned according to the transferred real estate projects and the certificates of financial institutions are provided, they can be deducted according to the facts, but the maximum amount can not exceed the amount calculated according to the loan interest rate of commercial banks in the same period. Other real estate development expenses shall be deducted within 5% of the sum of the amount paid for the land use right and the real estate development cost. If the interest expense cannot be calculated according to the transferred real estate project or the financial institution certificate cannot be provided, the real estate development expense shall be deducted according to 10% of the sum of the amount paid for obtaining the land use right and the real estate development cost.
Because microfinance companies are usually unable to obtain financial licenses and are not recognized as financial institutions, the land value-added tax on interest expenses borrowed by enterprises from microfinance companies is often not allowed to be deducted according to the facts, but it can be deducted within 5% of the sum of "the amount paid by land use rights" and "the cost of real estate development".