Enterprise income tax is the second largest tax in China. As long as the company starts to operate and make profits, it must pay enterprise income tax. The heavy tax burden of 25% makes many business owners have to find a reasonable way to avoid corporate income tax. How to avoid tax reasonably and narrow the income tax base of enterprise income tax is actually to reduce the taxable income. The smaller the tax base, the less tax will be paid. The tax basis of enterprise income tax is taxable income, and its calculation formula is: taxable income = total income-non-taxable income-tax-free income-various deductible items-allowing to make up for losses in previous years. From this formula, we can see that to reduce the taxable income, we can start planning from two aspects: income and various deductible items. Calculation method: enterprise income tax deduction project The statutory deduction project of enterprise income tax is the project to determine the taxable income of enterprise income tax. According to the enterprise income tax regulations, the taxable income of an enterprise is determined by the total income of the enterprise MINUS the cost, expenses, losses and deductible items. Cost is the direct and indirect expenses incurred by taxpayers for producing, managing goods and providing services. Expenses refer to the sales expenses, management expenses and financial expenses incurred by taxpayers for producing and operating commodities and providing services. Losses refer to all kinds of non-operating expenses, operating losses and investment losses incurred by taxpayers in the process of production and operation. In addition, when calculating the taxable income of enterprises, if the taxpayer's financial accounting treatment is inconsistent with the tax regulations, it should be adjusted according to the tax regulations. In addition to costs, expenses and losses, the statutory deductions for enterprise income tax also stipulate some deductions that need to be adjusted according to tax laws and regulations. It mainly includes the following contents: (1) Deduction of interest expenses. The interest expenses of taxpayers borrowing from financial institutions during the production and operation period shall be deducted according to the facts; The interest expense of borrowing from non-financial institutions is not higher than the amount calculated according to the interest rate of similar loans of financial institutions in the same period, and deduction is allowed. (2) Deduction of taxable wages. The regulations stipulate that the reasonable wages and salaries of enterprises should be deducted according to the facts, which means that the taxable wage system for domestic enterprises that has been implemented for many years has been cancelled, effectively reducing the burden on domestic enterprises. However, wages and salaries that are allowed to be deducted according to the facts must be "reasonable", and wages and salaries that are obviously unreasonable are not deducted. In the future, State Taxation Administration of The People's Republic of China will define "rationality" by formulating management measures for wage deduction that are compatible with the implementation regulations. (3) In terms of employee welfare funds, trade union funds and employee education funds, the implementation regulations continue to maintain the previous deduction standards (the extraction ratio is 14%, 2% and 2.5% respectively), but the "total taxable wages" is adjusted to "total wages and salaries", and the deduction amount is increased accordingly. In terms of employee education funds, in order to encourage enterprises to strengthen investment in employee education, the implementation regulations stipulate that, unless otherwise stipulated by the competent department of finance and taxation of the State Council, the part of employee education funds incurred by enterprises that does not exceed 2.5% of total wages and salaries is allowed to be deducted; The excess shall be allowed to be carried forward and deducted in future tax years. (4) Deduction of donation. Taxpayers' public welfare and relief donations are allowed to be deducted if they are within 12% of the annual accounting profit. The part exceeding 12% will not be deducted. 5] Deduction of business entertainment expenses. Business entertainment expenses refer to social entertainment expenses incurred by taxpayers for the reasonable needs of production and operation. According to the provisions of the tax law, the business entertainment expenses incurred by taxpayers related to production and operation shall be deducted within the following limits: Article 43 of the Regulations for the Implementation of the Enterprise Income Tax Law further clarifies that the entertainment expenses incurred by an enterprise related to production and operation shall be deducted according to 60% of the amount incurred, but the maximum amount shall not exceed 5‰ of the sales (operating income) of that year, that is to say, the tax law adopts the method of "two certificates in one". On the one hand, the business entertainment expenses incurred by enterprises are only allowed to be charged to 60% to distinguish business entertainment expenses from personal consumption, and the personal consumption part of business entertainment expenses is removed by designing a unified ratio; On the other hand, the maximum deduction is limited to 5‰ of sales (business) income in the current year, which is used to prevent some enterprises from using overcharged invoices or even fake invoices to deduct business entertainment expenses in order not to increase business entertainment expenses by 40%. [6] Excluding employee pension funds and unemployment insurance funds. It is allowed to deduct employee pension funds and unemployment insurance funds when calculating taxable income within the proportion and base approved by the provincial tax authorities. Once the disability security fund is deducted. The disabled person's security fund paid by taxpayers in accordance with local government regulations is allowed to be deducted when calculating taxable income. (8) Deduct property and transportation insurance premiums. Property paid by taxpayers. Transportation insurance premium is allowed to be deducted when tax is calculated. However, the non-indemnity preferential treatment given to taxpayers by insurance companies should be included in the taxable income of enterprises. (9) Deduction of fixed assets rental fee. Taxpayers can directly deduct the rental fee of fixed assets in the form of operating lease before tax; The rental fee of fixed assets rented by means of financial leasing shall not be deducted directly before tax, except for the interest expenses in the rental fee. The handling fee can be deducted directly when paying. ⑽ Deduction of bad debt reserve, bad debt reserve and commodity discount reserve. The provision for bad debts and bad debts withdrawn by taxpayers are allowed to be deducted when calculating taxable income. The extraction standard is temporarily implemented according to the financial system. The commodity discount reserve drawn by taxpayers is allowed to be deducted when calculating taxes. ⑾ Deduction of expenditure on fixed assets transfer. Taxpayer's expenditure on the transfer of fixed assets refers to the expenses such as clean-up expenses incurred when transferring or selling fixed assets. Taxpayers' expenditures on the transfer of fixed assets are allowed to be deducted when calculating taxes. ⑿ Deduct the net loss of fixed assets and current assets due to inventory loss, damage and scrapping. The taxpayer's net loss of fixed assets caused by inventory loss, damage or scrapping shall be deducted after the taxpayer provides inventory loss information and is audited by the competent tax authorities. The net loss mentioned here does not include the incomings of fixed assets of enterprises. The taxpayer's net loss of current assets due to inventory loss, damage or scrapping shall be deducted before tax after the taxpayer provides inventory information and is audited by the competent tax authorities. [13] Deduct the head office management fee. The management fees related to the production and operation of enterprises paid by taxpayers to the head office shall provide the certification documents on the scope, quota, distribution basis and method of management fees issued by the head office, which shall be allowed to be deducted after being audited by the competent tax authorities. [14] Debt interest income deduction. Taxpayers' interest income from debt purchase is not included in taxable income. ⒂ Deduction of other income. Including all kinds of fiscal subsidy income, turnover tax reduced or refunded, except those stipulated by the State Council, Ministry of Finance and State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), which can not be included in the taxable income, the rest should be incorporated into the taxable income of enterprises for tax calculation. [16] Deduction of loss compensation. Taxpayers' annual losses can be made up by next year's income. If the income in the next tax year is insufficient, it can be made up year by year, but the longest period shall not exceed 5 years. Enterprise income tax shall not be deducted. When calculating taxable income, the following expenditures shall not be deducted: (1) Capital expenditures. Refers to the taxpayer's expenditure on the purchase and construction of fixed assets and foreign investment. The capital expenditure of an enterprise shall not be deducted directly before tax, but shall be amortized gradually through depreciation. (2) Expenditure on intangible assets transfer and development. Refers to the taxpayer's expenditure on purchasing intangible assets and developing intangible assets. Expenditure on the transfer and development of intangible assets shall not be deducted directly, but shall be amortized in installments during the benefit period. (3) Asset impairment reserve. The provision for impairment of fixed assets and intangible assets is not allowed to be deducted before tax; The provision for impairment of other assets shall not be deducted before tax before it is converted into a major loss. (four) illegal business fines and confiscation of property losses. Taxpayers violate national laws. Laws and regulations, the relevant departments of fines and confiscation of property losses shall not be deducted. 5] Late fees, fines and penalties for various taxes. Late payment fees and fines imposed by tax authorities, fines imposed by judicial departments, and fines other than the above shall not be deducted before tax. (6) Compensation for losses caused by natural disasters or accidents. If a taxpayer suffers from natural disasters or accidents, the compensation paid by the insurance company shall not be deducted before tax. (seven) public welfare and relief donations, as well as non-public welfare and relief donations, which exceed the amount allowed by the state to be deducted. Donations made by taxpayers for non-public welfare and relief purposes, as well as donations exceeding 12% of the total annual profit, are not allowed to be deducted. Various sponsorship fees. (9) Other expenses unrelated to income. Although taxation is inevitable, we can meet the preferential conditions stipulated in the tax law by changing the way of business activities and financial activities under the circumstances permitted by law, so as to achieve the purpose of reducing taxation.