Separation refers to the separation and transfer of part or all of the assets of an enterprise to an existing or newly established enterprise, and the shareholders of the separated enterprise pay the equity or non-equity of the separated enterprise in exchange to realize the legal separation of the enterprise. What tax issues may be involved in the separation process and how to deal with them? Bian Xiao is here to analyze for readers. (I) No business tax is levied on the activities of enterprise division "Provisional Regulations of the People's Republic of China on Business Tax" and its implementation rules: the scope of business tax collection is the acts of providing taxable services, transferring intangible assets or selling real estate in People's Republic of China (PRC). The separation of enterprises does not belong to the scope of taxation. Its essence is that the shareholders of the separated enterprise transfer their assets and liabilities to another enterprise, which is different from the business tax behavior of the separated enterprise transferring its assets (land use rights, houses and buildings) to another enterprise. Therefore, business tax should not be levied on enterprises separately. The Reply of State Taxation Administration of The People's Republic of China on the Issue of No Business Tax on Enterprise Property Right Transfer (Guo [2002]165) stipulates: "According to the Provisional Regulations of the People's Republic of China on Business Tax and its detailed rules for implementation, the scope of business tax collection is the act of providing taxable services, transferring intangible assets or selling real estate with compensation. The transfer of enterprise property rights is the overall transfer of enterprise assets, creditor's rights, debts and labor, and its transfer price is not only determined by the value of assets, but also completely different from the behavior of enterprises selling real estate and transferring intangible assets. Therefore, the transfer of enterprise property rights does not fall within the scope of business tax collection, and business tax should not be levied. " (2) No value-added tax is levied on the separation activities of enterprises. According to the Provisional Regulations of People's Republic of China (PRC) on Value-added Tax and its detailed rules for implementation, the scope of collection of value-added tax is to sell goods or provide processing, repair and replacement services and import goods within the territory of People's Republic of China (PRC). The separation of enterprises does not belong to the scope of taxation. Its essence is that the shareholders of the separated enterprise transfer the assets and liabilities of the enterprise to another enterprise, which is different from the VAT application behavior of the separated enterprise transferring the assets (inventory and fixed assets) of the enterprise to another enterprise. Therefore, value-added tax should not be levied on enterprise division. The Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Taxpayer's Asset Restructuring Related to Value-added Tax (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China AnnouncementNo. 1 1) stipulates: "Taxpayers' transfer of all or part of physical assets and their related claims, liabilities and services to other units and individuals through merger, division, sale and replacement in the process of asset restructuring does not belong to the scope of VAT taxation. (3) No land value-added tax shall be levied on the separation activities of enterprises. According to the Provisional Regulations of People's Republic of China (PRC) on Land Value-added Tax, the scope of land value-added tax collection is to transfer the right to use state-owned land and its buildings and attachments on the ground and obtain income. The transfer of land ownership involved in enterprise division does not belong to the scope of land value-added tax. It is not the separated enterprise that transfers the land to the newly established enterprise, but the shareholders of the separated enterprise exchange the assets for shares. Therefore, the land transfer involved in the separation of enterprises is not subject to land value-added tax. (4) Corporate income tax treatment of enterprise separation activities: general tax treatment and characteristic tax treatment 1. General tax treatment of enterprise separation Caishui [2009] No.59 stipulates that when an enterprise is divided, the parties concerned shall deal with it according to the following provisions: (1) The divided enterprise shall confirm the gains or losses from asset transfer at fair value; (two) a separate enterprise shall confirm the tax basis of accepting assets at fair value; (3) When the separated enterprise continues to exist, the consideration obtained by its shareholders shall be deemed to be distributed by the separated enterprise; (4) When the discrete enterprise ceases to exist, the discrete enterprise and its shareholders shall be subject to income tax treatment according to liquidation; (5) The losses of enterprises related to the division of enterprises shall not be carried forward to make up for each other. For example, enterprise A should be divided into A and B, that is, the way of separation of existence (separation that does not meet the special tax treatment conditions). At this time, the tax treatment is as follows: assets separated from enterprise A, such as land, fixed assets, inventory, investment, etc. , it is necessary to confirm the gain or loss of asset transfer at fair value; The tax basis of these assets acquired by enterprise B is also recognized at fair value; Shareholders of enterprise A who obtain equity or other non-equity payments from enterprise B should be treated as reinvested in the separated enterprise (in fact, the profits of Chinese enterprises can be exempted from tax); The losses of enterprises A and B shall not be carried forward to make up for each other. In addition, Article 14 of the Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Issuing the Measures for the Administration of Enterprise Income Tax on Enterprise Reorganization (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.4,20 20 10/0) stipulates: "When an enterprise is divided, it shall be liquidated in accordance with the provisions of Caishui [2009] No.60 document. When submitting the tax return of enterprise liquidation income, a separate enterprise shall attach the following materials: (1) the approval document of the industrial and commercial department of the enterprise or other government departments; (two) the tax basis of all assets of the separate enterprise and the asset evaluation report issued by the evaluation agency; (3) a description of the enterprise's debt treatment or ownership; (4) Other documents required by the competent tax authorities. "Article 15 stipulates:" When an enterprise is divided, if the transitional policy of enjoying the tax benefits stipulated in Article 57 of the Tax Law for the whole enterprise (that is, all the income from production and operation) is not full, only the tax benefits that the surviving enterprise does not enjoy shall be implemented in accordance with the provisions of Article 9 of Caishui [2009] No.59; The cancelled tax preference is no longer enjoyed by the separated enterprise, and the surviving enterprise is no longer inherited; The newly established enterprise after division shall not inherit or enjoy the above preferential treatment again. In accordance with the tax preferential provisions of the tax law and the transitional policy of tax preferential treatment, the inheritance of tax preferential treatment enjoyed by enterprises from production and operation projects shall be carried out in accordance with the provisions of Article 89 of the Implementation Regulations. 2. Characteristics of tax treatment of enterprise division According to the provisions of Caishui [2009] No.59, if the division meets the following conditions, special tax treatment can be adopted: (1) It has a reasonable commercial purpose, and its main purpose is not to reduce, exempt or delay the payment of taxes; (2) Within 65,438+02 months after the separation of the enterprise, the original substantive business activities of the separated assets will not change; (3) The original major shareholder who has obtained equity payment shall not transfer the acquired equity within 12 months after the division; (4) All shareholders of the separated enterprise obtain the equity of the separated enterprise according to the original shareholding ratio, and both the separated enterprise and the separated enterprise do not change the original substantive business activities, and the amount of equity payment obtained by the shareholders of the separated enterprise at the time of enterprise division is not less than 85% of the total transaction payment. The specific tax treatment methods are as follows: (1) The tax basis of the assets and liabilities of the separated enterprise is determined by the original tax basis of the separated enterprise; (two) the income tax items corresponding to the assets separated by the separate enterprise shall be inherited by the separate enterprise; (3) The losses of the separated enterprise that have not exceeded the statutory compensation period can be distributed according to the proportion of the separated assets to all assets, and the separated enterprise will continue to make up for them; (4) If the shareholders of the separated enterprise need to give up the original equity of the separated enterprise (hereinafter referred to as the "old shares") in order to obtain the equity of the separated enterprise, the tax basis of the "new shares" shall be determined by the tax basis of those who give up the "old shares". If you don't need to give up your old shares, you can determine the tax basis for obtaining new shares in the following two ways: directly determine that the tax basis for new shares is zero; Or reduce the tax basis of the original "old shares" according to the proportion of the total net assets of the separated enterprise, and then distribute the reduced tax basis to the "new shares" on average; (5) If the relevant asset transfer gains or losses are not confirmed for the time being, the non-equity payment shall still confirm the corresponding asset transfer gains or losses during the current transaction, and adjust the tax basis of the corresponding assets. Income or loss from asset transfer corresponding to non-equity payment = (fair value of transferred assets-tax basis of transferred assets) × (amount of non-equity payment ÷ fair value of transferred assets) In addition, Article 27 of the Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Issuing Measures for the Administration of Enterprise Income Tax for Enterprise Restructuring (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.4,20 20 10/0) stipulates: "When an enterprise is divided, the following information shall be prepared. The description should include the business purpose of enterprise separation; (two) the approval document of the competent government department on the division of the enterprise; (3) Relevant information such as the net assets, book value of individual assets and liabilities, and tax basis of the separated enterprise; (4) Materials proving that the reorganization meets the special tax treatment conditions, including the proportion of equity payment obtained by each shareholder after the division, and the letter of commitment that the original substantive business activities of assets will not be changed and the original major shareholder will not transfer the acquired equity within 65,438+02 months. ; (five) certification materials of the proportion of shareholders' rights and interests of the divided or separated enterprise as determined by the industrial and commercial department; After the division, a copy of the industrial and commercial business license of the divided or separated enterprise; A copy of the accounting treatment of the split business of the split and the split enterprise; (6) Other documents required by the tax authorities. "(V) Personal income tax If the shareholders of a divided enterprise are natural person shareholders and unincorporated shareholders, is it necessary to pay income tax when the enterprise is divided? Is it a profit reinvestment? If so, foreign individuals do not need to pay personal income tax, while China individuals need to pay personal income tax as "dividends". The Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on the Exemption from Individual Income Tax on the Transfer of Share Capital and the Distribution of Bonus Shares (Guo Shui Fa [1997]No. 198) and the Reply on the Collection of Individual Income Tax on the Transfer of Registered Capital (Guo Fa [1998] No.333) stipulate: "The transfer of surplus reserve fund to individual capital shall be in accordance with. The Notice of the State Taxation Bureau of People's Republic of China (PRC) on the Exemption from Individual Income Tax for Joint-stock Enterprises to Increase Share Capital and Distribute Bonus Shares (Guo Shui Fa [1997] 198No.) stipulates: "Shareholding enterprises to increase share capital from capital reserve is not a dividend distribution, and the amount of increased share capital obtained by individuals is not regarded as personal income and is not subject to individual income tax. "Although it is clearly stipulated in the document that capital reserve fund will not be taxed when it is converted into share capital, it was supplemented in the subsequent Reply of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China on Personal Income Tax on Individual Share Value-added Income in the Process of Transforming the Original Urban Credit Cooperatives into Urban Cooperative Banks (Guoshuihan [1998] No.289). There is no need to pay tax when the capital reserve is converted into share capital as mentioned in Guo Shui Fa [1997] 198. Specifically, it means that the capital reserve formed by the premium share issuance income of joint-stock enterprises is not taxable income, and personal income tax is not levied. However, other capital reserves that do not meet this requirement should be taxed according to law, including the conversion difference of foreign currency capital, asset appreciation, etc. As can be seen from the above documents, the state needs to pay individual income tax for the part of the transferred capital that belongs to individuals. So, what about separation? There is no explicit provision for the time being. The author believes that the separation of enterprises is not necessarily the investment of after-tax profits. What about the original investment split? In addition, can we refer to the special treatment provisions of enterprise income tax and give preferential policies for deferred tax payment under certain conditions? In the specific operation, it is likely to depend on the judgment of the local tax authorities. (VI) Deed Tax Article 3 of the Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China, on Certain Deed Tax Policies for Enterprise Restructuring and Reorganization (Cai Shui [2008] 175) stipulates: "As of 201,12, 3 1, enterprises are divided into two. (VII) Stamp Duty Article 2 of the Notice of State Taxation Administration of The People's Republic of China of the Ministry of Finance of People's Republic of China (PRC) on Stamp Duty Policy in the Process of Enterprise Restructuring (Cai Shui [2003] 183) stipulates: "For a newly established enterprise due to merger or division, the funds recorded in its newly opened fund account book may not be declared, and the undeclared part and the newly added funds may be declared as required. "