Article 38 of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that the following interest expenses incurred by an enterprise in its production and business activities are allowed to be deducted:
(two) the interest expenses 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.
Notice of State Taxation Administration of The People's Republic of China on Pre-tax Deduction of Enterprise Income Tax on Interest Expenditure of Enterprises Borrowing from Natural Persons (Guoshuihan [2009] No.777)
Article 2 stipulates that if an enterprise borrows money from its internal employees or other personnel other than those specified in Article 1 and meets the following conditions at the same time, it shall deduct interest expenses in accordance with 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;
(two) enterprises and individuals signed a loan contract.
According to the above provisions, the interest expenses of loans obtained by the company from subsidiaries of the group and loans entrusted by individuals from banks do not exceed the amount calculated according to the interest rate of similar loans of financial enterprises in the same period, and are allowed to be deducted.
The Notice of Dalian Local Taxation Bureau on Clarifying the Policy Provisions on Several Business Issues of Enterprise Income Tax (Dida Shui Han [2010] No.39) stipulates that similar loans in the same period refer to an economic business that borrows from financial enterprises and non-financial enterprises at the same time, and the calculation of its interest rate includes the benchmark interest rate and floating interest rate of similar loans in the same period; If there is no loan for financial enterprises, the interest rate of similar loans in the same period shall be calculated according to the benchmark interest rate published by the People's Bank of China.