The soaring price of 20 10 has made the national financial supervision increasingly strict, and the means to deal with "hot money" have emerged one after another. The deterioration of the financial environment directly affects the working capital of enterprises. The operating profit brought by the market that has not fully recovered to most enterprises is far from meeting the operating needs, and private lending is surging. In view of the various sources of corporate borrowing funds, many financial executives have a headache when they settle accounts at the end of the year. How much interest can they pay before corporate income tax? Experts from China Tax Network are here to answer your questions: 1. General Provisions on Pre-tax Expenses of Interest Article 27 of the Regulations for the Implementation of the Enterprise Income Tax Law specifies the scope of expenses that can be paid before enterprise income tax: "The related expenses mentioned in Article 8 of the Enterprise Income Tax Law refer to expenses directly related to income. The reasonable expenditure mentioned in Article 8 of the Enterprise Income Tax Law refers to the necessary normal expenditure that conforms to the routine of production and business activities and should be included in the current profit and loss or the cost of related assets. " Article 28 of the Regulations on the Implementation of the Enterprise Income Tax Law also divides the expenditure items: "The expenditure incurred by an enterprise shall be distinguished from the income expenditure and the capital expenditure. Income and expenditure are deducted directly in the current period; Capital expenditures shall be deducted by stages or included in the cost of related assets, and shall not be deducted directly in the current period. " Article 38 of the Regulations for the Implementation of the Enterprise Income Tax Law clearly stipulates the items of interest expenses that can be charged before tax: "The following interest expenses incurred by an enterprise in its production and business activities are allowed to be deducted: (1) the interest expenses incurred by non-financial enterprises in borrowing from financial enterprises, the interest expenses incurred by various deposits and interbank loans of financial enterprises, and the interest expenses incurred by enterprises in issuing bonds upon approval; (2) The interest expense of non-financial enterprises borrowing 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. " According to the above provisions, we can definitely draw the following conclusions: (1) Reasonable interest expenses related to enterprise production and operation can be deducted before enterprise income tax. The so-called reasonable expenditure should pay attention to two points: 1, and distinguish between income expenditure and capital expenditure, that is, interest expenditure belonging to fixed assets construction and other projects should be capitalized and included in the original value of assets, but not included in financial expenses. 2. Interest expenses of property formed by non-taxable income shall not be deducted before tax. (2) The calculation method of allowable charge is as follows: 1. Interest expenses on loans from financial enterprises are calculated at the interest rate agreed in the loan contract, and pre-tax deduction is allowed; 2. Deduction is allowed for the interest expense of borrowing from non-financial enterprises that does not exceed the amount calculated according to the interest rate of similar loans of financial enterprises in the same period. Because the People's Bank of China stipulates only the standard interest rate, and all commercial banks have the right to float the interest rate according to the risk of customers, generally not exceeding 30%. In practical work, it is necessary to master the application of "loan interest rate of the same type in the same period", that is, according to the specific terms agreed in the loan agreement signed with non-financial institutions, obtain the loan interest rate of the same loan type and the same loan term and calculate it, instead of using the loan interest rate of one-year working capital. If we can get the provisions of the internal documents of local major banks on the conditions of enterprise-scale loans, we may pay more interest before enterprise income tax, because usually the loan interest rate of commercial banks to small enterprises will rise. If an enterprise happens to borrow money from a financial enterprise, it can refer to the actual loan contract interest rate. (III) Legal documents of pre-tax expenses The tax law has no detailed provisions on the contractual basis of pre-tax expenses. We refer to the "Follow-up management of canceling the approval of enterprise loan interest" issued by Guo Shui Fa (2004) No.80 and the current actual management measures of tax authorities. It is suggested that enterprises keep the following commercial documents for future reference: 1, loan contract or loan agreement 2, bank loan interest statement at the time of signing loan agreement or loan policy documents of relevant commercial banks 3, explanation of the comparison between loan interest rate and general commercial loan interest rate at the time of signing loan contract 4, payment records of interest expenses 5, invoices, receipts or other explanatory documents of the payee 2, special provisions of the Enterprise Income Tax Law and its implementing regulations on interest expenses of related party loans and special chapters for tax adjustment. (1) Before calculating the interest expense, we must make clear which loans should be classified as related party loans, so we must grasp the following provisions on related party relations: 1. Control relationship: directly or indirectly holding more than 0/0% of the voting shares of the enterprise/KLOC, and jointly holding more than 50% of the shares of the enterprise; 2. Substantial control relationship: the shareholding ratio of a resident enterprise or between a resident enterprise and China residents does not meet the above standards, but it has substantial control over the enterprise in terms of shares, capital, operation, purchase and sale, etc. 3. Article 109 of Chapter VI of the Regulations for the Implementation of the Enterprise Income Tax Law clearly stipulates that related parties refer to enterprises, other organizations or individuals that have one of the following related relationships with enterprises: they have direct or indirect control relations in terms of capital, operation, purchase and sale; Directly or indirectly controlled by a third party; There are other related relationships in interests. (II) According to the above-mentioned related party relationship, we can classify and calculate: the related party with investment relationship borrows 1, and the investor's contribution is not in place: Document No.312 of Guoshuihan [2009] clearly stipulates: "If an enterprise investor fails to pay its due capital within the prescribed time limit, the interest generated by the enterprise's external loan is equivalent to the paid-in capital of the investor within the prescribed time limit. In practical work, we must pay attention to the fact that the investment is not in place, which means that the registered capital payable according to the articles of association of the enterprise is not in place, rather than the difference between the paid-in capital and the registered capital. At present, the Company Law and the Regulations on Industrial and Commercial Registration clearly stipulate that the registered capital can be paid in full by installments within two years. Therefore, when there is a difference between the registered capital and the paid-in capital, it should be analyzed in detail according to the articles of association. If the difference is the unexpired part of the installment payment stipulated in the articles of association, it cannot be regarded as the capital contribution is not in place. Only when the registered capital is paid in accordance with the articles of association and the investor fails to pay the registered capital on time, the investor's contribution is not in place. When the investor's investment is not in place, the interest expenses of the enterprise's foreign loans equivalent to unpaid registered capital shall not be charged before tax. The specific calculation method is as follows: the loan interest that the enterprise can't deduct in each calculation period = the loan interest amount of the current period × the unpaid registered capital of the current period ÷ The total loan interest that the enterprise can't deduct in one year is the sum of the loan interest amount that can't be deducted in each calculation period of the current year. 2. The difference between debt investment and equity investment Article 46 of the Enterprise Income Tax stipulates: "The interest expenses incurred when the ratio of debt investment and equity investment accepted by an enterprise from its related parties exceeds the prescribed standard shall not be deducted when calculating the taxable income. "Article 119 of the Regulations for the Implementation of the Enterprise Income Tax Law clearly stipulates: (1) Debt investment refers to the interest-paying financing that an enterprise obtains directly or indirectly from related parties and needs to repay the principal and pay interest, or needs to be compensated in other ways. The creditor's rights investment indirectly obtained by enterprises from related parties includes: (1) creditor's rights investment provided by related parties through unrelated third parties; (2) The creditor's rights investment is provided by an unrelated third party, and the related party provides guarantee and assumes joint liability; (3) Other creditor's rights investments with significant liabilities indirectly obtained from related parties. (2) Equity investment refers to the investment accepted by an enterprise that does not need to repay the principal and pay interest, and the investor has ownership over the net assets of the enterprise. At the same time, Caishui [2008] 1 21clearly stipulates the deduction standard: the ratio of the interest expenses actually paid by the enterprise to the related party's debt investment and equity investment is (1) 5:1for financial enterprises; (2) Other enterprises, 2: 1. According to the provisions of the above documents, we need to pay attention to the following issues in practical work: 1. Where an enterprise is engaged in both financial business and non-financial business, it shall calculate the actual interest expenses paid to related parties separately according to reasonable methods. If it cannot be accounted separately, it can only be calculated by 2: 1 2. Relevant certificates should be kept. If the relevant evidence can prove that the signing of the loan agreement conforms to the principle of independent transaction, or the actual tax burden of related parties is the same, and there is no profit transfer and underpayment of enterprise income tax, then the actual interest expenses can be deducted. 3. In actual calculation, the proportion of equity investment and bond investment should be calculated according to each shareholder, in which equity investment should be based on the paid-in capital, and there should be no investment in place. The Tax Law on Income from Loans of Non-investment Related Parties and its implementing regulations, and the document Caishui [2008]121have no detailed provisions on the pre-tax expenses of loan interest of non-investment related parties. In practice, the amount of debt investment and equity investment of related parties should be calculated respectively according to the provisions of Article 119 of the Regulations for the Implementation of the Enterprise Income Tax Law. If there is no equity investment, it is recommended to calculate it within the paid-in capital of the enterprise. Three. Special provisions on natural person borrowing For natural person borrowing, it is first necessary to clarify the identity of the natural person and whether it belongs to a related party. If it is a related party, it shall be subject to the provisions on interest expenses of related party loans. If the loan is made by a non-related party, it shall be implemented in accordance with the provisions of document No.777 [2009] of the State Administration of Taxation: if the loan of an enterprise meets the following conditions at the same time, the interest expenses shall be deducted in accordance with the provisions of Article 8 of the Tax Law and Article 27 of the Regulations for the Implementation of the Tax Law. (1) The loan between an enterprise and an individual is true, lawful and effective, and there is no illegal fund-raising purpose or other illegal acts; Loan contracts signed between enterprises and individuals. According to the provisions of the above documents, we need to pay attention to the following issues in practical work: 1. Must sign a legal loan agreement with a natural person; 2, the loan must be true, that is, there must be a clear flow of funds; 3. Fund-raising for internal employees must be approved, and at least there must be legal documents such as resolutions of the board of directors to ensure its legitimacy; 4. Interest payment should have a clear flow of funds and withhold relevant taxes.