Tax treatment of compensation income from policy relocation: According to the relevant provisions of the Notice on the Treatment of Enterprise Income Tax from Policy Relocation or Disposal of Enterprises (Guo [2009] 118):1. According to the relocation plan, the enterprise will resume its original production and operation business or change it into a new production and operation business after reconstruction in different places. If the income from relocation or disposal of an enterprise is used to purchase and build new fixed assets and land use rights (hereinafter referred to as fixed assets replacement) with the same or similar nature and use as before relocation, or to improve other fixed assets, carry out technological transformation and resettle employees, the balance after deducting the expenses of fixed assets replacement or improvement, technological transformation and employee resettlement from the income from relocation or disposal shall be included in the taxable income of the enterprise. 2. If an enterprise has no plans or project reports on the renovation and technical transformation of fixed assets or the purchase of other fixed assets, it shall add the relocation income to the sales income of all kinds of dismantled fixed assets, and include the residual value and disposal expenses of all kinds of dismantled fixed assets into the taxable income of the enterprise in the current year to calculate and pay enterprise income tax. 3. Fixed assets purchased or improved by enterprises with the income from policy relocation or disposal can be depreciated or amortized according to the current tax regulations and deducted before enterprise income tax. 4. Within five years from the year following the planned relocation, if the relocation income or disposal income of the enterprise is not included in the taxable income of the enterprise in that year, if the relocation income of the enterprise is completed within five years, it shall be handled in accordance with the above provisions.

From the above comparison, it can be seen that the main accounting treatment of policy relocation compensation income: when an enterprise receives the eligible policy relocation compensation income, it should first pass the "special accounts payable" account, and then gradually carry it over from the "special accounts payable" account to the "deferred revenue" and "capital reserve" account. The main tax treatment of policy relocation compensation income: enterprises can enjoy tax benefits such as pre-tax deduction of depreciation or amortization of replacement assets and tax deferral for 5 years if they obtain qualified policy relocation income. There are specific differences between accounting treatment and tax treatment of compensation income for policy relocation:

1. The regulations on whether the relocation and disposal income obtained by the relocated enterprise is included in the annual income are inconsistent. Tax: If the enterprise fails to complete the relocation within 5 years from the year following the planned relocation, the relocation income or disposal income obtained during the unfinished relocation period will not be included in the taxable income of the enterprise for the time being. Accounting treatment is non-operating income. Therefore, tax reduction should be done when calculating income tax.

2. The provisions on whether the balance of relocation compensation income after the relocation and transformation of enterprises is included in the annual income are inconsistent. Tax: if the enterprise completes the relocation within five years from the year following the planned relocation, the balance of all kinds of compensation income after deducting the replacement cost of fixed assets and other related expenses shall be included in the taxable income. According to accounting regulations, if the relocation compensation income obtained by an enterprise has a surplus after deducting the amount transferred to deferred revenue, it will be treated as capital reserve. Therefore, when calculating income tax, this part of the balance should be treated as tax increase.

3. The provisions on whether the compensation income for demolition and relocation, depreciation and amortization of replacement assets are included in the expenses are inconsistent. Tax: Fixed assets purchased or improved by enterprises with the income from policy relocation or disposal can be depreciated or amortized according to the current tax regulations and deducted before enterprise income tax. In accounting treatment, according to the provisions of government subsidy standards, the depreciation and amortization of assets formed by relocation compensation income should be transferred from deferred revenue to non-operating income. In fact, this part of depreciation and amortization is not deducted from the total profit of the enterprise. Therefore, when calculating income tax, it should be reduced by taxpayers.