Does subsidy income need to pay VAT?
According to Article 7 of the Announcement of State Taxation Administration of The People's Republic of China on Cancelling the Time Limit for Certification and Confirmation of VAT Tax Deduction Certificates (No.45 of State Taxation Administration of The People's Republic of China Announcement Year), if the fiscal subsidy income obtained by taxpayers is directly linked to the income or quantity of goods, services, intangible assets and real estate, VAT shall be calculated and paid in accordance with the regulations. The fiscal subsidy income obtained by taxpayers under other circumstances does not belong to the taxable income of value-added tax and is not subject to value-added tax.
Therefore, when receiving financial subsidies, we must first accurately judge whether it is directly linked to income or directly linked to quantity. If it is directly linked to the income or quantity of goods, labor services, services, intangible assets and real estate, the value-added tax shall be calculated and paid in accordance with the provisions. The fiscal subsidy income obtained by taxpayers under other circumstances does not belong to the taxable income of value-added tax and is not subject to value-added tax.
What does fiscal subsidy income mean?
Financial subsidy income refers to all kinds of business funds obtained by institutions directly from the financial department and through the competent department, including normal funds and special funds. Under the traditional budget system and budget accounting system of administrative institutions in China, funds are also called funds, and the funds received are called appropriations.
The financial subsidy income only includes the budgetary funds that institutions receive from the financial department and are not reimbursed separately.
(1) Non-financial subsidy funds used by the competent department or the superior unit, such as business income, operating income or funds invested by the subsidiary unit to subsidize the normal business of the subsidiary unit, should be regarded as the superior subsidy income of the subsidiary unit, not as financial subsidy income;
(2) The allocated financial subsidies are limited to special purposes, and when the institutions are required to conduct separate accounting and reimbursement, they should not be regarded as the financial subsidy income of the institutions, but as the allocated funds;
(3) The state's investment in capital construction of public institutions is not included in the fiscal subsidy income.
Financial subsidy income related accounting entries
1, government subsidies related to assets:
(1) Government subsidies related to assets are recognized as deferred revenue, and gradually transferred to profit and loss with the use of assets; The accounting entries are as follows:
When the enterprise receives the subsidy funds,
Borrow: bank deposits, etc.
Loans: deferred income
Related assets are included in profit and loss in stages (in a reasonable and systematic way) during their service life.
Debit: Deferred income.
Loans: other income/non-operating income
(2) Subsidies will be deducted from the book value of assets to reflect the actual acquisition cost of long-term assets.
2. Income-related government subsidies:
This subsidy is mainly used to compensate the expenses or losses that have occurred or will occur in the enterprise. The benefit period is short, so it is usually included in the current profit and loss or offset the related costs when the conditions attached to the subsidy are met.