According to the Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises (hereinafter referred to as the tax law) and the relevant provisions of its implementation rules, The provisions on tax treatment issues such as business continuity determination, asset valuation, tax preference and loss carry-over in the reorganization business of foreign-invested enterprises (hereinafter referred to as enterprises) are as follows:
1. Tax treatment of merger
Merger means that two or more enterprises are merged into one enterprise in accordance with relevant laws and regulations. Among them, the parties to the merger are dissolved and * * * is established as a new enterprise, which is a new merger (also called dissolution merger); One party of the merger survives, and the other parties dissolve and merge into the surviving party, which is called absorption merger (also called survival merger). No matter what way the enterprise is merged, it does not need to go through liquidation procedures. Shareholders (investors) of the enterprise before the merger will continue to be shareholders of the merged enterprise unless they request to withdraw their shares. The creditor's rights and debts of the merged enterprise shall be inherited by the merged enterprise through the procedures prescribed by law.
(IV) Handling of losses in the previous period
The operating losses that have not been made up by each enterprise before the merger can be made up by the merged enterprise year by year within the remaining period of the loss making-up period stipulated in Article 11 of the tax law. If the merged enterprise has business offices in areas where different tax rates apply, or has production and business operations with different tax rates or different periods of regular tax reduction or exemption, it shall divide and calculate the corresponding income according to the provisions of Item (5) of this paragraph. The above-mentioned operating losses of the enterprise before the merger shall be made up in the income with the same tax treatment as that of the enterprise before the merger, and the specific method shall be carried out by referring to the second paragraph of Article 91 of the Detailed Rules for the Implementation of the Tax Law.
iii. tax treatment of equity restructuring
equity restructuring refers to the change of the amount or proportion of shares held by shareholders (investors) of an enterprise, including: (1) equity transfer, that is, the shareholders of an enterprise transfer part or all of their equity or shares to others; (2) Capital increase and share expansion, that is, enterprises raise shares from the society and issue shares, and new shareholders invest in shares or original shareholders increase their investment to expand their shares, thus increasing the capital of enterprises. The equity reorganization of an enterprise is the investment or transaction behavior of its shareholders, which belongs to the reorganization of the equity structure of the enterprise and does not affect the survival of the enterprise; The enterprise does not need to go through liquidation procedures, and the relationship between creditor's rights and debts of the enterprise will continue to be effective after the equity reorganization.
3. The operating losses of an enterprise that have not been made up before the equity restructuring can be made up year by year after the equity restructuring within the remaining period of the loss making-up period stipulated in Article 11 of the Tax Law.
At the same time, the regulation also stipulates
IV. Tax treatment of asset transfer
Asset transfer refers to: an enterprise transfers some or all assets (including goodwill, business operation and liquidation assets) of its own enterprise or another enterprise. The transfer and transfer of assets by an enterprise shall not affect the existence of the enterprises of both parties.
(IV) Handling of losses in the previous period
The operating losses incurred by both the asset transfer and the transferee before and after the asset transfer shall be recovered year by year within the loss recovery period specified in Article 11 of the Tax Law. No matter whether the enterprise transfers part or all of its assets and business, the operating losses of the enterprise shall not be carried forward between the asset transfer and the transferee.
Therefore, according to the documents, there is no basis for the tax authorities not to allow you to make up the losses! !