Because the current laws and regulations have not issued relevant tax exemption policies for enterprise demolition, the compensation obtained by enterprises for demolition is not within the scope of tax exemption and non-taxation. After the enterprises have obtained the compensation for demolition and deducted the corresponding expenses according to law, the remaining compensation should be paid corporate income tax at the corporate income tax rate of 25%.

2. The newly purchased land, houses, machinery and equipment used by enterprises for relocation compensation shall not be deducted, and the deductible items are relocation expenses and asset disposal expenses

1. Article 15 of the Measures for the Administration of Enterprise Policy Relocation Income Tax (hereinafter referred to as Document No.4), the current State Taxation Administration of The People's Republic of China Announcement No.4 in 212, stipulates that "all kinds of assets purchased by enterprises in the process of reconstruction or resumption of production shall not be used as relocation expenses. The first item of State Taxation Administration of The People's Republic of China Announcement No.11 (213) "Announcement on Issues Related to Enterprise Policy Relocation Income Tax" stipulates that "any policy relocation project that signed a relocation agreement after October 1, 212, the corresponding purchase of various assets shall not be regarded as relocation expenses".

draw the attention of enterprises: the provision that the expenses of purchasing land, houses, machinery and equipment can be deducted as stipulated in the Notice of State Taxation Administration of The People's Republic of China on the Treatment of Enterprise Income Tax on the Policy Relocation or Disposal of Income of Enterprises No.118 in Guoshuihan [29] has been abolished. The second item of the repealed No.118 document states: "In the relocation planning of enterprises, the original production and business operations will be restored or converted after reconstruction in different places. If the income from relocation or disposal of enterprises is used to purchase or build new fixed assets and land use rights with the same or similar nature and use as before relocation, or to improve other fixed assets, or to carry out technological transformation, or to resettle employees, the balance of the income from relocation or disposal after deducting the expenditure on the replacement or improvement of fixed assets, the expenditure on technological transformation and the expenditure on the resettlement of employees will be included in the taxable income of enterprises.

therefore, for the enterprise demolition project after October 1, 212, the cost of replacing land, houses, machinery and equipment shall not be deducted from the demolition compensation. This part often has a large amount, so business owners should make careful decisions on new purchase projects in the process of relocation, so as to avoid the tax risk of non-deductible and large taxable amount.

2. The deduction items of compensation for enterprise relocation are mainly aimed at employee resettlement and assets sale and relocation expenses. This part accounts for a relatively small proportion compared with assets replacement expenses, but there are many detailed items, which generally exist in the process of enterprise relocation, and enterprises need to pay attention to the financial accounting under specific deduction items.

In practice, the calculation result of all deductible items accounts for about 5% of the total compensation for demolition. If the enterprise has professional accountants and tax personnel to organize and sort out the materials and restore the real situation of the above expenses, the above deductible items may reach about 2% of the total compensation for demolition.

according to the provisions of articles 8, 9 and 1 of State Taxation Administration of The People's Republic of China announcement No.4 (212) Measures for the Administration of Income Tax on Enterprise Policy Relocation, these items specifically include:

1. Actual expenses incurred in resettling employees;

2. Wages and welfare expenses paid to employees during shutdown;

3. Expenses incurred by temporarily storing the relocated assets;

4. Relocation and installation expenses of various assets and other expenses related to relocation;

5. expenses incurred by enterprises in disposing of various assets due to relocation, including the net value of selling and disposing of various assets, taxes and other expenses incurred in the process of disposal.

6. If the assets scrapped by the enterprise due to relocation have no transfer value, their net value will be regarded as the asset disposal expenses of the enterprise.

3. If it meets the requirements of policy relocation, enterprises can apply for filing to obtain the preferential policy of five-year deferred tax payment for relocation compensation.

Document p>《4 provides enterprises with the preferential policy of deferred tax payment, which stipulates that enterprises can enjoy a maximum of five years' deferred tax payment period from the year of relocation to May 31st of the following year if they submit relevant materials such as policy relocation basis and relocation plan to the competent tax authorities.

due to the existence of the bottom clause, the scope of policy relocation is large. If the subject of expropriation and demolition is the government; Based on the two conditions of public interests, the demolition project can basically be included in the scope of policy relocation. Circular No.4 clearly defines the interests of the public, and an enterprise should judge the nature of the demolition project in time when it receives the relocation announcement:

(1) the needs of national defense and diplomacy;

(2) the needs of energy, transportation, water conservancy and other infrastructure organized and implemented by the government;

(3) the needs of public undertakings such as science and technology, education, culture, health, sports, environmental and resource protection, disaster prevention and mitigation, cultural relics protection, social welfare, and municipal utilities organized and implemented by the government;

(4) the needs of the construction of affordable housing projects organized and implemented by the government;

(5) the need to rebuild the old city in areas with concentrated dangerous buildings and backward infrastructure organized and implemented by the government in accordance with the relevant provisions of the Urban and Rural Planning Law of the People's Republic of China;

(6) other public interests as stipulated by laws and administrative regulations.

deferred tax payment refers to the relocation income and relocation expenses incurred during the relocation period, which can be temporarily excluded from the taxable income in the current period, but the balance of relocation compensation will be collected, liquidated and taxed after the relocation year of up to five years.

to sum up, after receiving the compensation for demolition, an enterprise should make clear its corporate income tax liability, judge whether it can enjoy preferential tax policies in time, and understand the relevant requirements of the above tax-related matters, so as to avoid the risk of unpaid taxes.