If the company wants to cancel its business, what should be done with the inventory in the account?

1. Inventories that are in deficit or have deteriorated and have no sales value shall be treated as losses

(1) According to the "Administrative Measures for Pre-tax Deduction of Income Tax on Enterprise Asset Losses" (Announcement of the State Administration of Taxation) No. 25 of 2011) and the "Announcement of the State Administration of Taxation on Matters Concerning the Retention of Enterprise Income Tax Asset Loss Materials for Reference" (Announcement of the State Administration of Taxation No. 15 of 2018) stipulates that if there is a loss in inventory, the person responsible for the deduction of the amount of the loss shall be the person responsible for the deduction. The balance after compensation; losses due to inventory scrapping, damage or deterioration are the balance after deducting the taxable cost from the residual value and compensation from the responsible person; losses from inventory theft are the balance from the taxable cost after deducting insurance claims and compensation from the responsible person. To declare asset loss deductions to the tax authorities, enterprises only need to fill in the annual corporate income tax return form "Details of Pre-tax Deductions and Tax Adjustments for Asset Losses" (A105090) and no longer need to submit information related to asset losses. Relevant information shall be retained by the enterprise for future reference.

(2) According to the "Interim Regulations on Value-Added Tax" and its implementation rules, the input tax on purchased goods with abnormal losses and related labor and transportation services shall not be deducted from the output tax. . If it has been deducted, it should be transferred out. Abnormal losses here refer to losses caused by theft, loss, mold and deterioration due to poor management.

According to the "Notice of the Ministry of Finance and the State Administration of Taxation on Pre-tax Deduction Policies for Enterprise Asset Losses" (Caishui [2009] No. 57), enterprises due to inventory losses, damage, scrapping, theft, etc. Input VAT, which is not deductible from the output VAT, may be deducted together with inventory losses in calculating taxable income.

2. External sales

Enterprises selling goods are required to pay value-added tax and surcharges, purchase and sale contract stamp duties, and corporate income tax. When a company wants to cease operations and dispose of inventory, the sales price may be low. According to Article 35 of the Tax Collection Administration Law, if a taxpayer has any of the following circumstances, the tax authorities have the right to determine the amount of tax payable: (6) The tax calculation basis declared by the taxpayer is obviously low and is not justified Reason.

However, if an enterprise sells goods at a reduced price due to reasons such as repaying debts, changing production, going out of business, etc., it can generally be regarded as low-price sales with legitimate reasons.

3. Distribution to shareholders

(1) Value-added tax is treated as sales

According to the "Interim Regulations on Value-Added Tax", units and individual industrial and commercial households will automatically The distribution of goods produced, commissioned for processing or purchased to shareholders or investors shall be deemed to be the sale of goods. The deemed sales of goods shall be determined in the following order:

1. Determination based on the average sales price of similar goods by the taxpayer in the most recent period; 2. According to the average sales price of similar goods by other taxpayers in the most recent period The average sales price of the goods is determined;

3. The taxable price is determined based on the composition. The formula for the taxable price is:

The taxable price = cost (1 + cost profit rate)

(2) Corporate income tax is treated as sales

According to the provisions of the "Notice of the State Administration of Taxation on Issues Concerning the Treatment of Income Tax on Enterprise Disposal of Assets" (Guo Shui Han [2008] No. 828) and the "Announcement of the State Administration of Taxation on Issues Concerning Corporate Income Tax" (State Administration of Taxation Announcement No. 80, 2016), If an enterprise transfers assets to others for dividend distribution, since the ownership of the assets has changed and they are not internally disposed of assets, the sales revenue should be determined based on the fair value of the transferred assets.

(3) Withholding of personal income tax

According to the "Personal Income Tax Law" and its implementation regulations, dividends and bonus income refer to dividends and bonus income obtained by individuals owning equity shares. .

When the withholding agent pays interest, dividends, and bonus income, it shall withhold and pay personal income tax on a case-by-case basis in accordance with the law.