For example, after the merger of enterprise income tax law, according to international practice, enterprise income tax is used as the standard to define taxpayers, and the original standard of independent accounting of domestic enterprise income tax is no longer applicable. At the same time, it is stipulated that branches without legal person status should be aggregated to the head office for unified tax payment. Different organizational forms adopt independent tax payment and summary tax payment respectively, which will have an impact on the tax burden of the head office. Enterprises can make use of the new regulations and make effective tax planning by choosing the organizational form of branches.
Enterprises have two choices in organizational form: subsidiaries and branches. Among them, the subsidiary is an entity with independent legal personality and can bear civil legal responsibilities and obligations; A branch company is an entity without independent legal personality, which requires the head office to bear legal responsibilities and obligations. The main factors to be considered in the form of enterprise organization include: the profit and loss of branches, whether branches enjoy preferential tax rates, etc.
1. It is estimated that the profits of the branches to which preferential tax rates apply will be paid separately in the form of subsidiaries.
2. Estimate the profits of branches with non-preferential tax rates, select branch forms and collect them to the head office for tax payment to make up for the losses of the head office or other branches; Even if the subordinate companies are all profitable, the summary tax payment at this time has no tax saving effect, but it can reduce the tax cost of enterprises and improve management efficiency.
3. It is estimated that the losses of branches with non-preferential tax rates will be made up by the profits of other branches or head offices.
It is expected that the branches enjoying preferential tax rate will lose money. In this case, we should consider the ability of branches to turn losses. If they can turn losses in a short time, they should adopt the form of subsidiaries, otherwise they should adopt the form of branches, which is closely related to the business planning of enterprises. But generally speaking, if the tax rate of subordinate companies is low, it is advisable to set up subsidiaries and enjoy the local low tax rate.
If a branch is established overseas, the subsidiary is an independent legal person, and it is regarded as a resident taxpayer in the country where it is established, and usually bears the same comprehensive tax obligations as other resident companies in that country. However, subsidiaries enjoy more tax benefits than companies in the host country, and generally can enjoy the same tax benefits that the host country gives to its resident companies.
If the applicable tax rate in the host country is lower than that in the country of residence, the accumulated profits of subsidiaries can also benefit from deferred tax payment. However, the branch is not an independent legal person, and it is regarded as non-resident taxpayer in the country where it is established, and the profits incurred are consolidated and taxed with the head office. However, China's enterprise income tax law does not allow the profits and losses of domestic and foreign institutions to make up for each other. Therefore, if there is a loss in the operation of the branch during the operation period, the loss of the branch cannot offset the profit of the head office.