Lending between individuals belongs to private lending and does not need to be taxed. However, the interest generated by borrowing is taxable, and those who reach the threshold must pay relevant taxes, such as value-added tax and personal income tax.
For example, it is clearly stipulated in the individual income tax law that the income from royalties, interest, dividends, bonuses, property leasing, property transfer, accidental income and other income shall be subject to a proportional tax rate of 20%.
In addition, the "Implementation Measures for the Pilot Reform of Business Tax to VAT" points out that the scope of VAT taxation includes financial services. The so-called financial services are the business activities of financial insurance, which naturally include loan services. It is precisely because the loan services provided are financial services that the interest earned is subject to 3% VAT.
The VAT surtax and personal income tax obligations involved in personal private lending are generally withheld and remitted by withholding agents. Pay attention to timely payment, or you may be fined.
Interest income tax is also called deposit interest income tax. This is a tax on interest income from deposits, prepayments and securities. In the early days of the People's Republic of China, the state dominated the private economy, and a large amount of deposits and advances were made to banks, banks and industrial and commercial households to earn interest.
Do individuals need to pay interest income tax when borrowing from enterprises?
1. When an enterprise borrows money from an individual and pays interest, it shall withhold and remit personal income tax. Personal income tax is calculated at 20% of interest income.
2. The interest extracted by the enterprise shall be included in the financial expenses-interest expenses, and business tax, urban construction tax, education surcharge and local education surcharge shall not be paid.
3. When an enterprise signs a loan contract with an individual, stamp duty shall be calculated and paid according to 5/10000 of the amount recorded in the contract.
4. Enterprises should withhold and remit personal income tax when paying loan interest to individuals, and withholding agents should supervise enterprises or relevant organizations to withhold and remit personal income tax in accordance with the law when paying tax payable to individuals.
5. Whether an enterprise borrows money from an individual should be decided by the enterprise and the individual through consultation. If the interest expenses of the enterprise's borrowing from individuals are deducted before the enterprise income tax, the individual who obtains the interest shall provide the enterprise with an interest income invoice. That is, after individuals earn interest income, they will go to the tax authorities to issue invoices on their behalf.