How to pay taxes on dividends of sole proprietorship enterprises?

Individual proprietorship enterprises do not need to pay personal income tax for dividends. It should be noted that the dividend here should be the after-tax profit of the sole proprietorship enterprise in accordance with the regulations. As a sole proprietorship enterprise is not a legal person organization, it does not need to pay enterprise income tax after making profits, but it needs to pay personal income tax on its operating income. When a sole proprietorship enterprise uses its after-tax profits, it naturally does not need to pay a tax when paying dividends. Here we need to distinguish between after-tax profit and pre-tax profit. Sole proprietorship enterprises also need to pay attention to tax returns.

1. What taxes do shareholders need to pay for dividends?

1. Individual shareholders need to pay personal income tax for dividends.

The Individual Income Tax Law stipulates that interest, dividends and bonuses are subject to individual income tax at a proportional rate of 20%. However, dividends received by individual shareholders from listed companies can be taxed at half.

Article 1 of the Notice of State Taxation Administration of The People's Republic of China of the Ministry of Finance on Relevant Policies of Individual Income Tax on Dividends and Dividends stipulates that the income from dividends and dividends obtained by individual investors from listed companies shall be temporarily reduced by 50% and included in the personal taxable income, and individual income tax shall be levied according to the current tax law.

2. Dividends obtained by foreign individuals from foreign companies are not subject to personal income tax.

Item 8 of Article 2 of the Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China on Several Policy Issues concerning Individual Income Tax stipulates that dividends and bonus income obtained by foreign individuals from foreign-invested enterprises shall be temporarily exempted from individual income tax. At the same time, China's tax law also stipulates that dividends obtained by foreign individuals from domestic listed companies are not taxed.

State Taxation Administration of The People's Republic of China's Letter on Tax Issues Concerning Dividends Obtained by Overseas Individuals Holding Shares of Domestic Listed Companies clearly stipulates that dividends (bonuses) obtained by overseas individuals holding B shares or overseas shares (including H shares) from domestic enterprises issuing B shares or overseas shares are temporarily exempted from personal income tax.

3. After-tax profit dividends of resident enterprises are not subject to enterprise income tax.

The second paragraph of Article 26 of the Enterprise Income Tax Law stipulates that the income from equity investment such as dividends and bonuses among qualified resident enterprises is tax-free income. Article 3 stipulates that it is also tax-free income for a non-resident enterprise to set up an institution or place in China and obtain dividends, bonuses and other equity investment income from a resident enterprise actually related to the institution or place.

The "Regulations on the Implementation of the Enterprise Income Tax Law" further clarifies that dividends, bonuses and other equity investment income between eligible resident enterprises refer to the investment income obtained by resident enterprises directly investing in other resident enterprises. Dividends, bonuses and other equity investment income referred to therein do not include the investment income obtained by continuously holding shares publicly issued and listed and circulated by resident enterprises for less than 12 months. That is to say, the dividend that an enterprise holds shares of a listed company for less than 12 months needs to be taxed, and other dividends do not need to be taxed.

4. Non-resident enterprises should pay enterprise income tax on dividends.

After the implementation of the new enterprise income tax law, the dividends obtained by non-resident enterprises need to be paid at the tax rate of 10%. Although the tax rate stipulated in the tax law is 10%, but the country or region where the non-resident enterprise is located has signed a tax treaty with China, and the agreed tax rate is lower than 10%, it can be implemented according to the agreed tax rate.

For a limited liability company that has collected personal income tax at the collection rate, the after-tax profits of the enterprise are distributed to shareholders, and it is not necessary to pay personal income tax on the items of "dividend, interest and dividend income".

If a shareholder evades taxes when paying dividends, the people's court shall punish him accordingly according to the crime of tax evasion; If the shareholder is a natural person, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention control, and shall be fined accordingly; If the shareholder is a legal person organization, the people's court shall impose a corresponding fine on it and punish the principal responsible person.

Legal basis:

Individual Income Tax Law of the People's Republic of China

second

The following personal income shall be subject to personal income tax:

(1) Income from wages and salaries;

(2) Income from remuneration for labor services;

(3) Income from remuneration;

(4) Income from royalties;

(5) Operating income;

(6) Income from interest, dividends and bonuses;

(7) Income from property lease;

(8) Income from property transfer;