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Guidance for Final Settlement of Corporate Income Tax2021-06-17 14:48:04

Guidance for Final Settlement of Corporate Income Tax

 

(1)    What company should apply for the final settlement of income tax?

 

All resident corporate income tax payers (including overseas registered Chinese-funded holding resident corporates) that are engaged in production and operation (including trial production and trial operation) within FY 2020, or terminate business activities in the middle of 2020. Regardless of whether it is during the tax reduction or exemption period, and regardless of profit or loss, the corporate income tax should be settled and paid in accordance with the regulations.

The tax rebate payable by the branch corporate income tax calculated by the head office of the tax-paying corporate according to the tax sharing method shall be paid or refunded to the treasury by the branch on the spot.

According to the "Corporate Income Tax Law of the People's Republic of China", corporate income tax payers are corporates and other organizations that obtain income within the territory of the People's Republic of China. Including enterprise, institutions, social organizations and other organizations that obtain income established in China in accordance with Chinese laws and administrative regulations. 

Sole proprietorships and partnerships are not taxpayers of corporate income tax.

 

(2)    When is the time limit for the final settlement?

 

The 2020 corporate income tax settlement and settlement deadline is May 31, 2021.

The taxpayer shall submit the Company Annual Income Tax Settlement Declaration Form to the tax authority within five months after the end of the year and settle its payable and refundable tax.

If a taxpayer terminates its business activities in the middle of the year, it shall apply for the settlement of its current income tax to the tax authority within 60 days from the date of actual termination of business.

 

(3)    Documents to be submitted

 

1. Documents to be submitted by taxpayers that should pay tax under actual basis:

(a) "The People's Republic of China Corporate Income Tax Annual Tax Return (Type A, 2017 Edition)" and attached tables (The State Administration of Taxation Announcement No. 24, 2020);

(b) The company’s annual financial accounting report;

(c) If the company has business dealings with its related parties during the year or meets the conditions for submitting country reports, it shall deal with related parties.  The related business transactions between corporates shall be declared, and the "Annual Report on Related Business Transactions of Corporates of the People's Republic of China (2016 Edition)" will be attached; (4) Other materials required by tax authorities.

 

2. Documents to be submitted by taxpayers that should pay tax under deemed basis:

(a) "The People's Republic of China Corporate Income Tax Monthly (Quarterly) Prepayment and Annual Tax Return (Type B, 2018 Edition)" (Announcement of the State Administration of Taxation, 2020 Revision No. 12);

(b) "Controlled Foreign Corporate Information Reporting Form" (applicable to Article 45 of the Corporate Income Tax Law or resident corporates that require the application of Article 84 of the "Special Tax Adjustment Implementation Measures (for Trial Implementation)"

(c) Other materials required by tax authorities.

 

(4)    How to handle final settlement and payment

 

For the 2020 final settlement of corporate income tax, the taxpayer can apply on the official website or go to the tax authority.

The taxpayer shall complete and submit the applicable declaration form on the official website of Shenzhen Tax Service, State Taxation Administration, within the prescribed time limit for final settlement.

If the taxpayer cannot apply online, it can directly go to the tax service hall with relevant materials for the final settlement.

 

(5)    Notes

 

1. Taxpayers who prepay corporate income tax in a tax year in excess of the corporate income tax payable can apply for a tax refund or offset the corporate income tax payable in the next year.

2. If a taxpayer finds a declaration error after completing the settlement and payment of the current year in accordance with the regulations, he can apply for a correction declaration at the Electronic Taxation Bureau, or bring the required final settlement and payment materials to the Tax Service Office of the tax authority for correction declaration.

 

(6)    Taxpayers’ legal responsibilities

 

1. Taxpayers should correctly calculate the taxable income and income tax payable in accordance with the Corporate Income Tax Law of the People's Republic of China and its implementation regulations; fill in the annual tax return truthfully and correctly; Submitting relevant materials in a complete and timely manner, and taking legal responsibility for the authenticity, accuracy and completeness of tax returns.

2. If the taxpayer fails to complete the final settlement within the prescribed time limit, or fails to submit the materials required by the tax law, the competent tax authority will deal with it in accordance with the relevant provisions of the Tax Collection and Management Law of the People's Republic of China and its implementation rules.

3. Taxpayers who are unable to complete the final settlement within the prescribed time limit due to force majeure and other reasons must apply to the competent tax authority for extension of declaration within the prescribed time limit in accordance with the Tax Collection and Administration Law of the People's Republic of China" and its implementation rules. If the application for deferred declaration has not been processed, or the application for deferred declaration has not been approved, and the prescribed time limit is exceeded, the competent tax authority will deal with it in accordance with the relevant provisions of the tax law.


(7)    Tax Incentives

 

Guide to Tax Preferences Companies enjoying preferential treatments adopt the method of self-discrimination, declaration for enjoyment, and retention of relevant materials for future reference. Corporates should determine whether they meet the conditions of the preferential items according to their business conditions and relevant tax regulations. Those who meet the conditions can calculate the tax deductions and exemptions by themselves according to the time listed in the Corporate Income Tax Preferences Management, and fill in the corporate income tax return to enjoy tax incentives. At the same time, relevant materials are collected and kept for future reference in accordance with regulations.