At the end of the year, the wholly-owned subsidiary will hand over the total annual profit to the parent company, which will pay corporate income tax, value-added tax, urban construction tax, education tax surcharge and other taxes and fees. If the income tax rate applicable to the investor's enterprise is higher than that applicable to the invested enterprise, in addition to the regular preferential tax reduction and exemption stipulated by national tax laws and regulations, the investment income obtained shall be restored as pre-tax income according to regulations, incorporated into the taxable income of the investment enterprise, and the enterprise income tax shall be paid back according to law.

How do subsidiaries pay profits to the parent company?

Through profit distribution:

Debit: profit distribution-undistributed profit

Loan: dividend payable

Borrow: dividend payable.

Loans: bank deposits

Accounting treatment of subsidiaries:

According to the profit distribution resolution of the subsidiary shareholders' meeting: debit: profit distribution-undistributed profit, credit: profit payable.

turn over profits

Borrow: profit payable loan: bank deposit.

Parent company:

Debit: Dividends receivable

Loan: investment income

Debit: bank deposit, loan: dividend receivable

The parent company does not need to pay taxes. The profits shared by resident enterprises from resident enterprises shall be exempted from enterprise income tax.

The relevant provisions of the Company Law are as follows:

1. Article 103 The shareholders' meeting shall exercise the following functions and powers: (7) Deliberating and approving the company's profit distribution plan and loss recovery plan;

2. Article 106 Shareholders shall have one vote for each share they hold when attending the shareholders' meeting. The resolution of the shareholders' meeting must be passed by more than half of the voting rights held by the shareholders present at the meeting.

Second, according to the above provisions, we can draw the conclusion that:

1. As a listed company and a public company, the subsidiary shall be considered and decided by the shareholders' meeting.

2. If the parent company holds more than 50% of the shares and is in an absolute holding position, then according to the provisions of point 2 above, the parent company can determine the profit distribution plan according to its own wishes and pass it;

When you say handing in profits, you actually mean distributing profits.

How to deal with the after-tax profits of subsidiaries returned to the parent company?

Tax treatment of profits of wholly-owned subsidiaries

Taxpayers' profits from wholly-owned subsidiaries (that is, enterprises with assets 100% holding) are different from those of joint ventures and joint-stock enterprises. Therefore, investors do not have to pay the income tax that is underpaid due to the difference in tax rates between regions.

The wholly-owned subsidiaries mentioned here (enterprises with assets 100% holding) include the invested enterprises whose parent company directly owns equity capital 100% and the invested enterprises whose parent company directly or indirectly owns equity capital 100%.

If Company A owns 0/00% equity of Company B/KLOC, Company B owns 30% equity of Company C, Company A owns 70% equity of Company C, and Company A directly or indirectly owns 0/00% equity of Company C, and Company C is a wholly-owned subsidiary of Company A. ..