Recently, the author encountered a lawsuit case and found that the financial and taxation leaders of many large enterprises had a wrong understanding of accrual basis. Article 9 of the Regulations on the Implementation of Enterprise Income Tax clearly stipulates that the calculation of taxable income of enterprises is based on accrual basis and belongs to the income and expenses of the current period, regardless of whether the money is received or paid. The income and expenses that do not belong to this period, even if the money has been received and paid in this period, are not regarded as the income and expenses of this period. In practice, many people often ignore the exception clause of the Regulations on the Implementation of Enterprise Income Tax: "Except as otherwise provided by this Ordinance and the competent departments of finance and taxation of the State Council".
The concept of accrual basis originally came from accounting system. In 2006, the Accounting Standards for Business Enterprises raised the accrual basis to the accounting basis, as the measurement basis of enterprise accounting recognition, measurement and reporting, which runs through the whole process of the accounting standards system for business enterprises. The basic requirements of accrual basis are completely consistent with the provisions of enterprise income tax law, which is also one of the original intentions of the design of enterprise income tax law, that is, to minimize the difference between enterprise income tax and accounting. The accounting basis corresponding to accrual basis is cash basis, that is, cash received or paid is used as the basis for recognizing income and expenses. In terms of enterprise income tax, there are also principles of authenticity, rationality, relevance, certainty and legality corresponding to accrual basis, that is, "otherwise stipulated" as mentioned in Article 9 of the Regulations on the Implementation of Enterprise Income Tax. In other words, the taxation principle of enterprise income tax is generally based on accrual basis, and other principles coexist.
Article 8 of the Enterprise Income Tax Law stipulates that "reasonable expenses actually incurred by an enterprise, including costs, expenses, taxes, losses and other expenses, are allowed to be deducted when calculating taxable income", which actually clarifies three basic principles of pre-tax deduction, namely, authenticity (actual occurrence), relevance and rationality. For example, if an enterprise borrows money from another enterprise, it is agreed that the interest payable before 20 15 12 3 1 is100000 yuan. After that, the enterprise did not actually spend, but still included in the financial expenses according to the accrual basis principle, and declared and deducted in the final settlement of enterprise income tax in 20 15. The tax authorities require enterprises to increase enterprise income tax on the grounds that expenditures have not actually occurred.
Where is the basis of the tax authorities? The first paragraph of Article 38 of the Regulations on the Implementation of Enterprise Income Tax clearly stipulates: "The following interest expenses incurred by enterprises in their production and business activities are allowed to be deducted." Please note that what is clear here is "interest expense". The so-called expenditure is the actual expenditure, that is, interest must be paid first before we can talk about the rationality and relevance of pre-tax deduction. Therefore, if there is no actual expenditure, interest cannot be deducted before tax. Extending to other pre-tax deduction items, it can be seen from the implementation regulations that many provisions stipulate that the relevant pre-tax deduction items should be "expenditure", "payment", "payment" and "appropriation".
In fact, in the enterprise income tax law, only a few listed items can be withheld and deducted, and all other deductions must really occur. Therefore, authenticity is the first principle of pre-tax deduction, which requires enterprises not to deduct before tax without actual expenses. This principle has also been verified in Article 6 of the Announcement on Several Issues Concerning Enterprise Income Tax in State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) (State Taxation Administration of The People's Republic of China Announcement No.34, 20 1 1), that is, "If the actual costs and expenses incurred in the current year cannot be obtained in time for various reasons, the enterprise may temporarily account for the quarterly income tax in advance; However, at the time of final settlement, valid vouchers for such costs and expenses should be filled in. " In other words, if no valid certificate is provided to prove that the expenditure is true at the end of remittance, the enterprise should increase the taxable income in the remittance year.
There are many such examples in practice. A real estate development enterprise carries out maintenance on the delivered house, and the maintenance cost is 5 million yuan. Suppose the expenditure really happened, because the house is still in the warranty period of signing a contract with the construction party, and the development enterprise and the construction enterprise are fighting a lawsuit about who will bear the maintenance cost. In other words, whether the maintenance cost of 5 million yuan will ultimately be borne by the development enterprise has not been completely determined; On the grounds that expenses are "pending expenses", the tax authorities will increase taxes on this expenditure. This is actually the requirement of the certainty principle of enterprise income tax. This determination is mainly the determination of the amount. If it is found through trial that part of the expenses are not within the scope of contract guarantee, and the court decides that the development enterprise shall bear part of the expenses, the part of the expenses may be deducted before tax.
The principle of certainty is also reflected in the confirmation of enterprise income tax. The Notice of State Taxation Administration of The People's Republic of China on Several Issues Concerning the Confirmation of Enterprise Income Tax (Guo [2008] No.875) stipulates four conditions for an enterprise to confirm the income from the sale of goods, that is, the contract for the sale of goods has been signed and the enterprise has transferred the main risks and rewards related to the ownership of goods to the buyer; The enterprise has neither retained the right to continue management, which is usually associated with ownership, nor effectively controlled the sold goods; The amount of income can be measured reliably; The costs incurred or to be incurred by the seller can be recorded reliably. Compared with the accounting standards for business enterprises, there is one thing missing: related economic benefits are likely to flow into enterprises.
In other words, the enterprise should confirm that the possibility of recovering the price of the sold goods is greater than the possibility of not recovering it, that is, when the possibility of recovering the price of the sold goods exceeds 50%, it is recognized as enterprise income. Accounting standards are a challenge to the certainty principle of enterprise income tax. Based on the principle of accounting prudence, professional judgment is made through previous trading experience with the buyer and relevant government policies to confirm whether economic benefits are likely to flow into the enterprise, which brings uncertainty to enterprise income tax management. Therefore, the enterprise income tax gives up this article under the condition of confirming the income from selling goods. The principle of certainty is also reflected in the fact that the accrued expenses and estimated liabilities of the enterprise shall not be deducted. Of course, bad debt provision and various impairment provisions, enterprise income tax and accounting compromise after the game, allowing deduction according to certain standards in a certain year, is also a return to accrual basis.
Author: James Zhu, Jiangsu Local Taxation Bureau.
Source: China Tax News.