"Whether it is necessary to confirm deferred income tax for temporary differences arising from business combination depends on whether the business combination meets the requirements for special tax treatment, the type of business combination, the way of business combination and even the intention of business management." One of the highlights of Caishui [2009] No.59 document is that the tax treatment of enterprise restructuring is divided into different conditions and the general tax treatment provisions and special tax treatment provisions are applied respectively. Proceeding from the general tax principle, all the assets of an enterprise should be taxed, while the special tax treatment regulations can reduce the income tax burden when the enterprise is reorganized through tax deferral. Enterprise merger is one of the types of enterprise reorganization, but the meaning of merger defined in No.59 document is not exactly the same as that defined in Accounting Standards for Business Enterprises No.20-Business Combination (hereinafter referred to as Business Combination Standards). The merger defined in No.59 document is equivalent to the absorption merger and the newly established merger defined in the enterprise merger criteria, while the holding merger defined in the enterprise merger criteria is equivalent to the equity acquisition defined in No.59 document, that is, the merger defined in the enterprise merger criteria corresponds to the merger and equity acquisition defined in No.59 document. The criteria for business combination divide business combination into business combination under the same control and business combination under different control according to whether the parties to the merger belong to the same party or the same multi-party ultimate control before and after the merger, and stipulate that the accounting treatment should be carried out by the equity combination method and the purchase method respectively. This paper intends to discuss the influence of the special tax treatment provisions and the general tax treatment provisions on deferred income tax recognition when these two types of business combinations are applied respectively, combining the business combination criteria, income tax criteria and the relevant provisions of Circular 59. Merger under the same control With regard to holding merger (stock acquisition), according to the provisions of the enterprise merger standards, the initial investment cost of the long-term equity investment obtained through the enterprise merger under the same control is the share of the book value of the owner's equity of the merged party on the merger date. In the case of special tax treatment, the tax basis of long-term equity investment is the original tax basis of the acquired equity, that is, the original investment amount of the merged shareholders to the merged party, rather than the share of the merged party that should enjoy the book value of the owner's equity of the merged party on the merger date. Because the book value of the owner's equity of the merged party is usually not equal to the original investment amount of its shareholders, there will be a temporary difference between the book value of long-term equity investment and tax basis. However, under the general tax treatment provisions, the tax basis of long-term equity investment is determined on the basis of fair value. For the purchase price or the fair value of equity and the related customs fees paid, there will also be temporary differences between the book value of long-term equity investment and tax basis. Whether it is necessary for the merging party to confirm the deferred income tax for the temporary differences arising from the long-term equity investment obtained through business combination under the same control shall be determined according to the intention of the management of the merging party to hold the long-term equity investment. If the management of the merging party intends to hold the investment for a long time, the temporary differences arising from the long-term equity investment are not expected to be reversed in the future period, which will not have an impact on income tax in the future period, and the merging party does not need to confirm the relevant deferred income tax. If the management of the merging party intends to transfer or dispose of the investment in the future, the temporary differences arising from the long-term equity investment will have an income tax impact when transferring or disposing of the investment, and the merging party shall calculate and confirm the relevant deferred income tax according to the applicable income tax rate when transferring or disposing of the investment in the future. With regard to absorption and merger, according to the provisions of the enterprise merger standards, the assets and liabilities acquired by the merging party in the absorption and merger under the same control shall be accounted for according to the original book value of the relevant assets and liabilities in the merged party. In the case of special tax treatment provisions, the tax basis where the merging party accepts the assets and liabilities of the merged party is determined by the original tax basis of the merged party. Even if there are temporary differences in the assets and liabilities of the merged party, the income tax impact should be confirmed in the books and financial statements of the merged party, and the assets and liabilities acquired by the merged party under the same control will not have temporary differences, so there is no problem of confirming deferred income tax. However, in the case of applying the general tax treatment provisions, the merging party should determine the tax basis that accepts the assets and liabilities of the merged party according to the fair value, and the assets and liabilities obtained by the merging party usually have temporary differences, so it is necessary to confirm the deferred income tax. Merger under Non-common Control With regard to holding merger (stock acquisition), according to the provisions of the business combination standards, the long-term equity investment obtained through business combination under non-common control is regarded as its initial investment cost, which includes the fair value of cash or non-cash assets, debts issued or undertaken, equity securities issued by the buyer on the purchase date for business combination, and the sum of all direct related expenses or contingent considerations incurred for business combination. In the case of special tax treatment, the book value of long-term equity investment is usually temporarily different from that of tax basis. Whether the buyer needs to confirm the deferred income tax for the temporary differences arising from the long-term equity investment obtained through business combination under different control shall be determined according to the intention of the buyer's management to hold the long-term equity investment. However, under the general tax treatment provisions, there is usually no temporary difference between the book value of long-term equity investment and that of tax basis, so there is no problem of recognizing deferred income tax. With regard to merger and acquisition, according to the provisions of the business combination standards, the identifiable assets and liabilities obtained by the buyer in merger and acquisition under different control that meet the recognition conditions shall be recognized as the assets and liabilities of the enterprise according to their fair values. In the case of special tax treatment, the book values of identifiable assets and liabilities obtained by the buyer in the merger under different control that meet the recognition conditions are usually temporarily different from those in tax basis, so deferred income tax needs to be recognized. However, under the general tax treatment provisions, the book values of identifiable assets and liabilities obtained by the buyer in the merger under different control that meet the recognition conditions are usually not temporarily different from those of tax basis, so there is no recognition problem of deferred income tax.