Fiscal and taxation treatment of golf membership income

1. Accounting treatment

1. Recognition method of membership income

《Corporate Accounting "Standard No. 14 - Revenue" application guide clearly states: "Applying for membership fees and membership fees is only allowed to obtain membership, and all other services or goods will be charged separately. Revenue will be recognized when there is no significant uncertainty in the recovery of the money; application If the entrance fee and membership fee enable members to obtain various services or goods during the membership period, or sell goods or provide services at a lower price than non-members, the income will be recognized in installments during the entire benefit period. "For lifetime without use period. For membership, enterprises can choose to recognize revenue in installments based on the operating period or land use life.

2. Processing of withdrawals

Some golf clubs stipulate that members can withdraw from membership after a certain period of time and receive a full or partial refund of the membership fee. How to handle the accounting treatment for this part of the refunded membership fee? , there is no clear provision in the accounting standards. It is recommended to refer to the provisions of Article 9 of "Accounting Standards for Business Enterprises No. 14 - Revenue": "If the enterprise has confirmed the revenue from the sale of goods and returns of the goods sold, it shall be offset when it occurs. Revenue from sales of goods for the current period." Another advantage of doing this is that the refunded membership fees can be offset against the current period's turnover and reduce the current period's business tax. See the analysis below for details.

2. Income tax treatment

1. Method of recognition of membership income

Guo Shui Han [2008] No. 875 "State Administration of Taxation on the Recognition of Corporate Income Tax Income" "Notice on Issues" stipulates the method and time of recognition of membership fee income: "Applying for membership or joining as a member is only allowed to obtain membership. All other services or goods will be charged separately, and income will be recognized when the membership fee is obtained. Apply for membership or join After becoming a member, if a member can obtain various services or goods without paying during the membership period, or sell goods or provide services at a lower price than non-members, the membership fee should be recognized as income in installments during the entire benefit period." Income tax treatment is basically the same as accounting treatment.

2. Handling of withdrawals

As for the income tax treatment of membership fees refunded when members withdraw from membership, the above-mentioned National Taxation Letter [2008] No. 875 does not specify the specific treatment method. Currently, only the "National Taxation The Notice of the State Administration on How to Calculate Corporate Income Tax on Membership Fees Collection by Foreign-Invested Enterprises (Guo Shui Fa [1995] No. 146) has clarified: “If an enterprise refunds the above-mentioned money to its members when they withdraw from membership, the refunded part shall be included in the calculation. When paying corporate income tax, the corporate refund can be offset against the current income of the enterprise." Enterprises can refer to this document in actual operations.

3. Business tax treatment

1. Applicable tax rate

The golf industry belongs to the entertainment industry. The original business tax law stipulates that the golf industry is taxed at a tax rate of 20%. In 2009 The new business tax regulations that have been implemented since 2010 clearly state that the applicable tax rate for the entertainment industry is 5%-20%. The specific tax rate applicable to taxpayers operating in the entertainment industry shall be determined by the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government within the range specified in these regulations. Since 2010, Guangdong Province It will be reduced from 20% to 10% starting from this year.

2. Time of occurrence of business tax liability

(1) Guo Shui Han Fa [1994] No. 514 "Reply of the State Administration of Taxation on Tax Issues of Golf Clubs" stipulates: "For clubs The membership fee paid in full when a member joins the membership shall be paid in one lump sum. According to Article 9 of the "Provisional Regulations of the People's Republic of China on Business Tax": "The time when the tax liability for business tax occurs, the taxpayer shall receive the business income payment or obtain the receipt for claiming the business income payment." On that day, no matter how the income is handled financially, the day when the income is obtained is the time when the tax liability occurs, and the business tax is calculated and levied." The full text of this document is displayed on the General Administration's website.

(2) The new Interim Regulations on Business Tax that have been implemented since 2009 stipulates: "The time when the business tax liability occurs is the provision of taxable services, the transfer of intangible assets or the sale of real estate and the receipt of business income or the acquisition of claims for business income. On the day of receipt, if there are other provisions of the financial and taxation authorities of the State Council, those provisions shall prevail." There are no special provisions on membership fees after the implementation of the new business tax regulations.

After the implementation of the new tax law, the basis for citing the "State Administration of Taxation's Reply on Golf Club Tax Issues" No. 514 [1994] has changed, and theoretically the relevant provisions have become invalid. So, under the new business tax law, how to determine when the tax liability for one-time membership fees is incurred? Theoretically, when received, it is only an advance payment, and its tax liability should occur when services are provided. Business tax does not need to be paid when taxable services have not been provided during the preparation period.

3. Handling of withdrawals

Guoshuifa [1995] No. 76 "Notice of the State Administration of Taxation on Several Issues Concerning Business Tax" stipulates: "For clubs, exchanges or similar membership systems Economic, cultural, and sports organizations (hereinafter referred to as member organizations), membership fees, seat fees, qualification deposits and other similar fees collected when members join... If they are refunded when members withdraw, they will be directly offset against the accounts and refunded to the current period. The operating income can be deducted from the current turnover when calculating business tax."

IV. Accounting and tax treatment of the purchaser

1. Accounting treatment

"Reply of the Ministry of Finance on the Financial Treatment of Golf Membership Certificates" (Finance Reply (Gong Zi (1997) No. 329): The golf membership certificate purchased by a foreign-invested enterprise is a kind of capital expenditure and should be managed as "other assets" and divided into equal installments according to the expected benefit period or a period of not less than 10 years. Amortization, when amortized, is included in "social entertainment expenses" in "administrative expenses".

2. Income tax treatment

The State Administration of Taxation’s online Q&A on May 21, 2009 is as follows:

Question content:

Our company It is a logistics service company that often receives foreign customers. The company issued several golf certificates and spent hundreds of thousands in membership fees. When the intermediary agency conducted income tax calculations, it believed that this fee was unrelated to income. Tax adjustments should be made. We believe that this expense is the cost of developing business for the company and should be regarded as business expenses, at least as business entertainment expenses. Can this expense be deducted before tax? On what basis? Thanks!

Reply comments:

Hello:

We have received the tax consultation questions you submitted on our website. Here is a brief reply to the information you provided as follows: :

According to the "Enterprise Income Tax Law of the People's Republic of China":

"Article 8 The actual and reasonable expenditures incurred by the enterprise related to obtaining income, including costs , expenses, taxes, losses and other expenses are allowed to be deducted when calculating taxable income."

According to the "Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China":

< p>“Article 27: Relevant expenditures as mentioned in Article 8 of the Enterprise Income Tax Law refer to expenditures directly related to obtaining income.

Reasonable expenditures as mentioned in Article 8 of the Enterprise Income Tax Law are Refers to necessary and normal expenditures that are in compliance with the routine of production and business activities and should be included in the current profit and loss or the cost of relevant assets.

Article 43: Business entertainment expenses incurred by an enterprise related to production and business activities shall be in accordance with the following regulations. 60% of the amount incurred shall be deducted, but the maximum shall not exceed 5‰ of the current year’s sales (operating) income.”

According to the above regulations, the competent tax authorities will make professional judgments based on the actual situation regarding the deduction of the above-mentioned golf membership fees. , if it is for the daily rest and entertainment of the company's senior personnel, it is an expenditure unrelated to production and operation, which should be borne by the company itself and shall not be deducted before corporate income tax; if it is really used to contact business and entertain customers, it can be regarded as business entertainment expenses. Pre-tax expenditures are listed in accordance with prescribed standards.

Note: Golf membership also requires paying cultural undertaking construction fees based on 3% of income, urban maintenance and construction taxes, education surcharges, local education surcharges, flood control fees, etc., and related taxes based on a certain proportion of business tax. The policy is relatively simple and will not be analyzed in this article.

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