An enterprise legal person or shareholder borrows money from a bank in its own name and then uses the money for the production and operation of the enterprise. Although the funds are used for the business activities of the enterprise, it is not the enterprise that borrows money from the bank, and the interest on the bank loan is charged to the borrower. The principal and interest of the loan are paid by the enterprise to the individual, and then returned to the bank by the individual. In essence, individuals borrow money from banks and then lend it to enterprises.

Provisions on pre-tax deduction of interest on loans from enterprises to individuals: Article 6 of the Provisional Regulations on Enterprise Income Tax in People's Republic of China (PRC) stipulates that "the interest expenses incurred by taxpayers in lending to financial institutions during production and operation shall be deducted according to the facts; It is allowed to deduct the loan interest expenses of non-financial institutions not higher than the amount calculated according to the similar loan interest rate of financial institutions in the same period. " If the company's personal loan interest is paid according to the bank's loan interest for the same period, it can be deducted in full before tax. If it is higher than the bank's loan interest rate for the same period, tax adjustment should be made. For interest, whether it should be treated as financial expenses or capitalization should be determined according to the purpose of borrowing, and the interest of general working capital loans should be treated as financial expenses. An invoice must be provided to record interest, and the lender can apply to the tax bureau for an invoice. Individuals who earn interest shall pay business tax and personal income tax surcharges on the interest earned.