(1) Tax-related risks of software products sold by software production enterprises
When software enterprises sell software products, there are the following tax risks.
1. The enterprise income tax has been paid for the value-added tax obtained by the software production enterprise in selling software products. Since the profit-making year, newly-established software enterprises cannot enjoy the preferential enterprise income tax policy of "two exemptions and three reductions".
The first paragraph of Article 1 of the Notice of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China of the Ministry of Finance on Some Preferential Policies for Enterprise Income Tax (Caishui [2008] 1No.) stipulates: "The tax returned by software production enterprises after the implementation of the value-added tax policy will be used for enterprises to research and develop software products and expand reproduction. The taxable income that is not regarded as enterprise income is not subject to enterprise income tax. " The second paragraph stipulates: "After the newly established software production enterprises in China are recognized, the enterprise income tax will be exempted in the first and second years from the profit-making year, and the enterprise income tax will be reduced by half in the third to fifth years." Based on this provision, software enterprises can enjoy the VAT refund policy without collecting enterprise income tax. In addition, newly established software manufacturing enterprises in China can enjoy the enterprise income tax of "two exemptions and three reductions" from the profit-making year. However, in practice, enterprises must go through certain legal procedures to enjoy the preferential tax policies stipulated in the tax law, otherwise they cannot enjoy them, which makes enterprises pay more enterprise income tax.
Article 2 of the Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on the Administration of Enterprise Income Tax Relief (Guo Shui Fa [2008]1KLOC-0/No.) stipulates: "The approval of enterprise income tax relief must be the Enterprise Income Tax Law of People's Republic of China (PRC) and its implementing regulations, and the State Council has clear provisions and other contents that need approval." Article 4 stipulates: "If there are qualification requirements for enterprise income tax reduction and exemption, taxpayers must first obtain relevant qualification identification."
Article 2 of the Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on Printing and Distributing the Administrative Measures for Tax Relief (Trial) (Guo Shui Fa [2005]129) stipulates: "Tax relief refers to the tax relief granted to taxpayers in accordance with tax laws, regulations and relevant state tax regulations (hereinafter referred to as the tax law). Tax reduction refers to reducing part of the tax payable; Tax exemption refers to the exemption of a certain tax and a certain item. " Article 4 stipulates: "Tax reduction and exemption are divided into approval tax reduction and filing tax reduction and exemption. Examination and approval of tax reduction and exemption refers to tax reduction and exemption items that should be approved by the tax authorities; Filing tax reduction and exemption refers to tax reduction and exemption items that cancel the examination and approval procedures and tax reduction and exemption items that do not require the approval of the tax authorities. "
Article 5 stipulates: "Taxpayers who enjoy tax reduction or exemption for the record shall put it on record, and after being registered by the tax authorities, it shall be implemented as of the date of registration. Taxpayers who fail to declare in accordance with the regulations shall not be allowed to reduce or exempt taxes. "
Article 2 of the Supplementary Notice of State Taxation Administration of The People's Republic of China on Preferential Management of Enterprise Income Tax (Guo [2009] No.255) stipulates: "Except for the transitional preferential policies of enterprise income tax defined by the State Council, the original preferential policies of enterprise income tax that continue to be implemented after the implementation of the new tax law, the preferential policies of tax reduction and exemption for enterprises in ethnic autonomous areas, and the preferential policies of enterprise income tax that are subject to examination and approval management stipulated by the State Council, all other preferential policies of enterprise income tax are subject to record management. Article 4 stipulates: "Any preferential tax policies formulated by the state in the future that have not been explicitly approved shall be put on record. "
Article 3 of the Notice of the Ministry of Finance of State Taxation Administration of The People's Republic of China on the Value-added Tax Policy of Software Products (Cai Shui [201]100) stipulates: "Software products that meet the following conditions can enjoy the value-added tax policy stipulated in this notice upon examination and approval by the competent tax authorities:
(1) Test certification materials issued by software testing institutions recognized by provincial software industry authorities;
(2) Obtain the software product registration certificate issued by the competent department of software industry or the computer software copyright registration certificate issued by the copyright administrative department. "
Based on the above policies and regulations, software enterprises should enjoy the tax returned by VAT policy, and no enterprise income tax is levied. Newly established software manufacturing enterprises in China will enjoy preferential tax policies such as "two exemptions and three reductions" from the profit-making year, and they must go to the local tax authorities for examination and approval, otherwise they will not enjoy preferential tax policies.
2. The calculation of VAT refund for software products is inaccurate, which makes enterprises pay more or less VAT.
According to Article 2 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 the Value-added Tax Policy for Software Products (Caishui [201]100), the so-called software products refer to information processing programs and related documents and data. Software products include computer software products, information systems and embedded software products. Embedded software products refer to software products embedded in computer hardware and machinery and equipment and sold together with them, which constitute an integral part of computer hardware and machinery and equipment.
Paragraph 2 of Article 11 of the Notice of the Ministry of Finance on Several Policies on Value-added Tax in State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) (Caishui [2005] 165) stipulates: "Taxpayers who sell software products and sell software installation fees, maintenance fees, training fees and other income together shall be subject to the relevant provisions on mixed sales of value-added tax, and can enjoy the policy of refund of value-added tax on software products immediately. After the software products are delivered for use, the maintenance fees, technical service fees and training fees charged on schedule or per time are not subject to VAT. "
The Notice of the Ministry of Finance of State Taxation Administration of The People's Republic of China on the Value-added Tax Policy of Software Products (Caishui [201]100) makes the following detailed provisions on the value-added tax policy of software products:
(1) The general VAT taxpayer sells the software products developed and produced by himself, and after the VAT is levied at the rate of 17%, the part with the actual VAT tax burden exceeding 3% will be refunded immediately.
(2) VAT general taxpayers will localize the imported software products and sell them abroad. For the software products it sells, the actual tax burden of value-added tax exceeds 3%, and the tax refund on demand is implemented.
Localization refers to redesign, improvement, transformation, etc. Simple Chinese character processing of imported software products is not included.
(3) If a taxpayer is entrusted to develop a software product, the copyright belongs to the entrusted party, and if the copyright belongs to the entrusting party or both parties, the value-added tax shall not be levied. After being registered by the National Copyright Administration, taxpayers transfer their copyright and ownership at the time of sale, and no value-added tax is levied.
Article 5 of the Notice of the Ministry of Finance and the General Administration of Customs of State Taxation Administration of The People's Republic of China on Tax Policies to Encourage the Development of Software Industry and Integrated Circuit Industry (Caishui [2000] No.25) stipulates: "No confirmation letter is required for the self-use equipment and the technology (including software) imported with the equipment according to the contract, supporting parts and spare parts, which do not occupy the total investment. Except for the goods listed in the Catalogue of Imported Goods for Foreign-invested Projects and the Catalogue of Imported Goods for Domestic-funded Projects stipulated in the State Council Guofa [1997] No.37, customs duties and import value-added tax are exempted. "
Based on the above policies and legal basis, software manufacturers are uncertain about the scope of value-added tax on demand, and the calculation of value-added tax on embedded software products is inaccurate, which will make software manufacturers either pay more value-added tax or pay less value-added tax.