According to Item 4 of Article 4 of the Notice of the Ministry of Finance State Taxation Administration of The People's Republic of China on Several Issues Concerning the Handling of Enterprise Income Tax in Enterprise Reorganization (Caishui [2009] No.59, hereinafter referred to as the Notice), in general reorganization, the losses of the merged enterprise shall not be carried forward to make up for in the merged enterprise. However, Article 5 of the Notice stipulates that special tax treatment provisions shall apply to enterprise restructuring that meets the following conditions:

(1) It has a reasonable commercial purpose, and its main purpose is not to reduce, exempt or delay tax payment.

(two) the proportion of assets or equity of the acquired, merged or split part is in line with the proportion stipulated in this notice.

(3) The original substantive business activities of the restructured assets will not be changed within 12 months after the reorganization of the enterprise.

(4) The amount of equity payment involved in the consideration of the reorganization transaction conforms to the proportion stipulated in this notice.

(5) The original major shareholder who has obtained equity payment during enterprise reorganization shall not transfer the acquired equity within 65,438+02 months after reorganization. At the same time, Item 4 of Article 6 of the Notice stipulates that the special tax treatment for business combination is: business combination, where the amount of equity paid by the shareholders of the business combination is not less than 85% of the total transaction payment, and the business combination under the same control fails to pay the consideration, it can be handled in accordance with the following provisions:

1. The tax basis for the merged enterprise to accept the assets and liabilities of the merged enterprise shall be determined by the original tax basis of the merged enterprise.

2. The related income tax matters before the merger of the merged enterprise shall be inherited by the merged enterprise.

3. The loss limit of the merged enterprise that the merged enterprise can make up = the fair value of the net assets of the merged enterprise × the interest rate of the longest-term national debt issued by the state at the end of the year when the merged enterprise occurs.

4. The tax basis of the shareholders of the merged enterprise who have obtained the equity of the merged enterprise shall be determined by the tax basis of the original equity of the merged enterprise. According to the above provisions, if your company meets the above conditions when merging other enterprises, and the amount of equity payment obtained when merging other enterprises is not less than 85% of the total transaction payment, special restructuring tax treatment can be applied, and the losses of the merged enterprises can be made up by your company. The amount of losses that can be made up by the merged enterprise is the fair value of the net assets of the merged enterprise × the interest rate of the longest-term national debt issued by the state at the end of the year when the merged business occurs.