Analysis And Suggestions On The Problem Of Gratuitous Occupation Of Funds

(1) analysis of phenomena and causes. Free occupation of funds It is the act of using funds without paying interest. This phenomenon also exists in affiliated enterprises or related enterprises. The main performance is that an enterprise occupies the funds of another enterprise without compensation. The two sides do not pay or collect interest. It is like "Zhou Yu is willing to fight for a war." This phenomenon is more common in the companies with "mother child" relationship in China.

(2) behavior and policy analysis. Interest is payable on the use of funds. This is just like "debt repayment". Therefore, in business practice, borrowing funds without paying interest or no interest is a tenable reason. According to the Circular of the State Administration of Taxation on the handling of enterprise income tax on the payment of services between parent and subsidiary companies (2008) 86, the State Administration of Taxation stipulates:

First, the expenses incurred by the parent company in providing various services for its subsidiaries (hereinafter referred to as subsidiary companies) shall be determined according to the fair transaction principle between independent enterprises, and shall be treated as the normal labor expenses of the enterprises for tax treatment.

If the parent company fails to collect the price according to the business transactions between the independent enterprises, the tax authorities shall have the right to adjust them.

Two, the parent company provides various services to its subsidiaries, the two sides should sign a service contract or agreement, stipulate clearly the contents of providing services, the standard and amount of fees, etc., where the service fee incurred by the parent company according to the above contract or agreement, the parent company shall declare and pay the tax as the business income, and the subsidiary shall be deducted as the cost before the tax.

(3) processing recommendations. In view of the phenomenon of gratuitous occupation of funds between affiliated enterprises, we propose the following:

1) be based on tax law We should adjust the behavior of gratuitous occupation of funds and guard against the tax related risks. However, how much interest can be charged can be stipulated by both parties. But remember that the general spirit of the tax law is that income must be taxed, and the expenditure is eligible to allow deductions.

2) if a subsidiary occupies the parent company without compensation. capital Because of the existence of stock relations, the parent company can change the funds that the subsidiary has occupied without compensation to investment. This does not involve interest payments. If the corporate income tax rates of both parties are equal, they will not increase the tax burden of corporate income tax as a whole.

3) if there is a buying and selling relationship between the two parties, the funds that can be freely occupied can be changed into buying and selling contracts through the purchase and sale contracts. Whether the interest is added to the sum can be determined by the two parties in the contract independently. There is no rigid provision in the tax law. Or on credit sale, the party who needs the money does not pay the loan, and both sides do the bill processing, so that the capital demand side can also get a "interest free" loan.