According to the (Enterprise income tax law) and other related laws, In PRC the enterprise income tax should be calculated and prepaid by quart and make annual filing in year-end.
In enterprise income tax annual filing process, the taxpayer should self-calculate and file the tax return with taxable income, tax payable, prepaid tax and other related information. The enterprise could also entrust an agent firm to make the filing process and submit the tax return to tax authorities. After acceptance and verified by tax authorities, the taxpayer could settle the procedure of tax payment.
Object of enterprise income tax annual filing
According to the (Enterprise income tax law), Any enterprise who set up its financial and accounting system, allocate personnel in charge of finance and accounting, establish the accounting books, make up and report the statement of financial affairs, perform strictly the obligation of tax-paying, calculate correctly on taxable income and accept the supervision and check of the tax authority, all need to perform the annual income filing, including (foreign-owned enterprises, joint venture).
No matter gain, loss in the exemption period, all taxpayers were required to make the enterprise income tax annual filing.
Term of enterprise income tax annual filing
Foreign-owned enterprise should submit the financial reports and tax return to tax authorities in 4 months after year-end, and pay the over-due tax in 5 months after year-end. If the prepaid tax exceeded the tax payable, the tax authorities would process the refund or offset the tax of next year. Where, for special reasons, an enterprise cannot file an income tax return and final accounting statement within the period prescribed in above, an application shall be submitted within the filing period and, upon approval of the local tax authorities, the filing period may be extended appropriately.
Preparation documents of Filing
In filing process, the enterprise should submit below documents.
- Income tax return and attached.
- Final accounting statements
- Annual audit report issued by CPA in PRC
- Other documents required by tax authorities
Case Analysis
In 2010 ABC company’s total Salaries and wages were RMB 1.85M and among the RMB 1.85M, RMB 0.25M were for annual bonus which would be distributed in 2011. In actual operation ABC Company deducted all salaries and wages, RMB1.85M as cost from taxable income in year-end.
Article 34 of the Enterprise Income Taxes Law（PRC）stipulated that reasonable employee salaries and wages incurred by an enterprise are deductible. The deductible salaries and wages should be actually distributed and has been withheld the individual income tax.
Therefore in enterprise income tax annual filing process the ABC company’s deductible salaries and wages of 2010 need be adjusted to RMB 1.6M and the taxable income would be increased by RMB 0.25M.
Our analyses and suggestions:
If your company need support in enterprise income tax annual filing, you could contact us, Shanghai Dongjin Business Consulting on this issue. We could arrange tax turn and communication with local Tax Authority for your company.