How is corporate income tax calculated? What are the deductions?

The expenditure incurred by the enterprise should be distinguished between revenue expenditure and capital expenditure. Revenue-generating expenses are directly deducted in the period in which they are incurred; Capital expenditures shall be deducted in installments or included in the cost of relevant assets, and shall not be directly deducted in the period in which they are incurred. The expenses or property formed by the non-taxable income of an enterprise used for expenditure shall not be deducted or calculated for depreciation and amortization.

1. Cost refers to the cost of sales, cost of goods sold, business expenses and other expenses incurred by an enterprise in its production and business activities. That is, the cost of selling goods (products, materials, scraps, scraps, waste materials, etc.), providing labor services, and transferring fixed assets and intangible assets.

2. Expenses refer to the sales expenses, management expenses and financial expenses incurred by enterprises in production and business activities. Except for related expenses that have already been costed.

1) Sales expenses refer to the expenses incurred for the sale of goods that should be borne by the enterprise.

2) Management expenses refer to the expenses incurred by the administrative department of the enterprise in providing various support services for the management of the organization's business activities.

3) Financial expenses refer to the expenses incurred by enterprises in raising operating funds.

The items that shall not be deducted in the calculation of enterprise income tax include: 1. Dividends, bonuses and other equity investment income paid to investors; 2. Enterprise income tax; 3. Tax late payment penalty refers to the late payment penalty imposed by the tax authorities on taxpayers who violate tax laws and regulations; 4. Fines, fines and loss of confiscated property; Wait a minute.

Reasonable expenses actually incurred by the enterprise in connection with the acquisition of income, including costs, expenses, taxes, losses and other expenses, are allowed to be deducted.

1) Cost. Cost of sales, cost of goods sold, business expenses and other expenses incurred in production and business activities.

2) Fees. Sales expenses, management expenses and financial expenses incurred by enterprises in production and operation activities.

The business entertainment expenses incurred by the enterprise related to production and business activities shall be deducted according to 60% of the amount incurred, but the maximum shall not exceed 5% of the sales (operation) income of the current year.

Unless otherwise specified, the part of the eligible advertising and business promotion expenses incurred by the enterprise shall not exceed 15% of the sales (operation) income of the current year, and shall be allowed to be deducted; The excess amount is allowed to be carried forward and deducted in subsequent tax years.

The part of the employee welfare expenses incurred by the enterprise that does not exceed 14% of the total wages and salaries is allowed to be deducted;

The part of the trade union funds allocated by the enterprise shall not exceed 2% of the total wages and salaries, and shall be allowed to be deducted;

Unless otherwise specified, the part of the employee education expenses incurred by the enterprise that does not exceed the total wages and salaries shall be allowed to be deducted, and the excess part shall be allowed to be carried forward and deducted in subsequent tax years.

The part of the public welfare donation expenditure incurred by the enterprise within 12% of the total annual profit is allowed to be deducted.

3) Taxes. Taxes other than enterprise income tax and allowable deduction of value-added tax and their surcharges incurred by the enterprise.

4) Losses. 2.In calculating taxable income, the following expenses are not deductible:

1) Dividends, bonuses and other equity investment income paid to investors;

2. Enterprise income tax;

3) tax late fees;

4. Fines, fines and loss of confiscated property;

5) Public welfare donation expenses other than 12% of the total annual profit;

6) Sponsorship expenditures.

Non-advertising expenses incurred by enterprises that are not related to production and business activities.

7) Unapproved reserve expenditures;

8) Management fees paid between enterprises, rents and royalties paid between business establishments within enterprises, and interest paid between business establishments within non-bank enterprises.

9) Other expenses unrelated to the acquisition of income.

The following accounting items shall not be used to deduct enterprise income tax: the cost of balancing investment assets during the period of foreign investment; Dividends, bonuses and other equity investment income paid to investors; Late payment of taxes; and unapproved reserve expenditures, among others.

The items that are not deductible in the calculation of corporate income tax include:

1) Dividends, bonuses and other equity investment income paid to investors;

2. Enterprise income tax;

3. Tax late payment penalty refers to the late payment penalty imposed by the tax authorities on taxpayers who violate tax laws and regulations;

4. Fines, fines and losses of confiscated property refer to the fines imposed by the relevant departments on taxpayers in violation of relevant national laws and regulations, as well as fines and confiscated property imposed by judicial authorities.

5. Donation expenditures that exceed the prescribed standards.

6. Sponsorship expenses refer to various non-advertising expenditures incurred by enterprises that are not related to production and business activities.

7. Unapproved reserve expenditure refers to the reserve expenditure that does not meet the requirements of the competent financial and taxation authorities.

8. Management fees paid between enterprises, rents and royalties paid between business establishments within enterprises, and interest paid between business establishments within non-bank enterprises shall not be deducted.

9) Other expenses unrelated to the acquisition of income.

1) Reasonable wages and salaries incurred by the enterprise are allowed to be deducted.

2) Pre-tax deduction of social insurance premiums.

3) Pre-tax deduction of employee welfare expenses, etc.

4) The business entertainment expenses incurred by the enterprise related to production and business activities shall be deducted according to 60% of the amount incurred, but the maximum shall not exceed 5% of the sales (operation) income of the current year.

5) Unless otherwise stipulated by the competent financial and tax authorities, the eligible advertising expenses and business publicity expenses incurred by the enterprise shall not exceed 15% of the sales (operation) income of the current year, which shall be allowed to be deducted; The excess amount is allowed to be carried forward and deducted in subsequent tax years.

6) Interest expenses incurred by enterprises in production and business activities are allowed to be deducted; The interest expense of non-financial enterprises on loans to non-financial enterprises shall not exceed the part of the amount calculated according to the interest rate of similar loans of financial enterprises in the same period.

7) Institutions or establishments established by non-resident enterprises within the territory of China shall be allowed to deduct the expenses incurred by their head office outside China related to the production and operation of such institutions and establishments if they can provide supporting documents such as the scope of fee collection, quota, basis and method of distribution issued by the head office, and reasonably apportion the expenses incurred by the head office outside China.

8) Unless otherwise specified, the costs and expenses corresponding to the tax-exempt income obtained by the enterprise can be deducted when calculating the taxable income of the enterprise.

Legal basis

Law of the People's Republic of China on the Administration of Tax Collection

Article 1 This Law is enacted for the purpose of strengthening the administration of tax collection, standardizing the collection and payment of taxes, safeguarding the State tax revenue, protecting the legitimate rights and interests of taxpayers, and promoting economic and social development.

Article 2 This Law shall apply to the collection and administration of all kinds of taxes levied by the taxation authorities in accordance with the law.

Article 3 The levy and suspension of taxation, as well as tax reduction, exemption, tax refund, and retroactive taxation shall be carried out in accordance with the provisions of the law; Where the law authorizes ***, it shall be implemented in accordance with the provisions of the administrative regulations formulated by ***.

No organ, unit, or individual may violate the provisions of laws and administrative regulations by making decisions on tax collection, suspending, tax reduction, tax exemption, tax refund, tax compensation, or other decisions that contradict tax laws and administrative regulations.

Article 4 Units and individuals that are liable to pay taxes as stipulated by laws and administrative regulations are taxpayers.

Units and individuals that are required by laws and administrative regulations to withhold and remit, collect and remit taxes are withholding agents. Taxpayers and withholding agents must pay, withhold, collect and remit taxes in accordance with the provisions of laws and administrative regulations.

The statutory deduction item of enterprise income tax is the item by which the taxable income of enterprise income tax is determined. The enterprise income tax regulations stipulate that the determination of the taxable income of an enterprise is the total income of the enterprise minus the amount of costs, expenses, losses and allowable deductions. Costs refer to the direct expenses and indirect expenses incurred by taxpayers for the production and operation of goods and the provision of labor services.

Expenses refer to the sales expenses, administrative expenses and financial expenses incurred by taxpayers for the production and operation of goods and the provision of labor services. Losses refer to the non-operating expenses, operating losses and investment losses of taxpayers in the process of production and operation. In addition, when calculating the taxable income of an enterprise, if the financial accounting treatment of the taxpayer is inconsistent with the tax regulations, it shall be adjusted in accordance with the tax regulations.

In addition to costs, expenses and losses, the relevant tax regulations also specify some deduction items that need to be adjusted in accordance with the tax regulations.

1. Deduction of interest expenses. The interest expenses incurred by taxpayers on loans from financial institutions during the period of production and operation shall be deducted according to the actual amount incurred; Interest expenses on loans borrowed from non-financial institutions are allowed to be deducted if they are not higher than the amount calculated according to the interest rate of the same type of loans of the financial institution for the same period.

2. Deduction of taxable wages. The regulations stipulate that reasonable wages and salaries of enterprises shall be deducted according to the facts, which means that the taxable wage system for domestic-funded enterprises, which has been in place for many years, has been abolished, and the burden on domestic-funded enterprises has been effectively reduced. However, the wages and salaries that are allowed to be deducted according to the facts must be reasonable, and the wages and salaries that are obviously unreasonable will not be deducted.

In the future, the State Administration of Taxation will clarify the reasonableness by formulating the Administrative Measures for Wage Deduction that are compatible with the Implementation Regulations.

3. In terms of employee welfare expenses, trade union funds and employee education expenses, the implementing regulations continue to maintain the previous deduction standards (the withdrawal ratios are .).5%), but the deduction is increased accordingly by adjusting the total taxable wages to the total wages and salaries. In terms of employee education funds, in order to encourage enterprises to strengthen investment in employee education, the implementation regulations stipulate that, unless otherwise stipulated by the competent financial and taxation authorities, the part of employee education expenses incurred by enterprises that does not exceed the total wages and salaries shall be allowed to be deducted; The excess amount is allowed to be carried forward and deducted in subsequent tax years.

4. Deduction of donations. Taxpayers' public welfare and relief donations are allowed to be deducted within 12% of the annual accounting profits. Deductions are not allowed for the amount exceeding 12%.

Article 9 The public welfare donation expenses incurred by enterprises within 12 of the total annual profits shall be allowed to be deducted in the calculation of taxable income; The part exceeding the total annual profit12 is allowed to be carried forward and deducted in the calculation of taxable income within the next three years.