One of the most painful problems is the refusal of landlords to sign off for the rental of offices and factories. Either “persons can't give the tickets” or, frankly, “tax points to pay”, a lot of finance staff are in trouble: how can this rent be accounted for without an invoice? Direct charges are not subject to tax checks, leaving companies to bear the costs. This is not as complicated as it is, it is not impossible to account for it without an invoice. The key is to follow a process that is consistent with accounting rules and avoids tax risks. Today, realism is spoken in plain language, and both start-ups and old businesses can be used directly。
First, it is a core principle: invoices are important but not the only evidence for pre-tax deductions. According to the administration of pre-income tax credits for enterprises, published by the general tax administration, no. 28 of 2018, the manner in which pre-tax deductions are made is discussed as long as the business actually takes place, even without an invoice. The fear is that there will be no invoices, no contracts, no transfer records and a mere receipt to account, a situation that is subject to a tax audit, with an approximate increase in taxable earnings, as well as tax and late payment。
For example, a technology company in beijing rented a residential office last year at $8,000 a month, and the landlord said it would cost five extra points, and the company thought it would not be necessary if it did not work. At the end of the year, when the remittances were calculated, the finance charged a direct charge of 96,000 yuan in rent, resulting in early warning by the tax authorities. The $96,000 cannot be deducted before tax due to the absence of a compliance deduction, companies apply 25 per cent of the corporate income tax rate and hard-core students pay more than $24,000. The tax could have been avoided had it been known how to proceed。
One or three scenarios correspond to three accounting methods
To address the issue of “free rent” recording, the first step would be to look at the amount of the rent and the subject of the transaction, with different treatments, risks and cost differences。
Scenario 1: monthly rent of $500 and below, fully deducted without invoice
If the company rents a small office space, warehouse, monthly rent of not more than $500 for a private landlord, it is a “small and small business”, and even if the landlord does not issue a ticket, it can account for two things:
• the payment certificate, written by the landlord, must contain the landlord's identification number, contact information, rent, payment time and address
• formal lease contracts between the parties。
This is the case with the lowest tax risk, and the policy explicitly recognizes such certificates as a basis for deduction without additional tax adjustments。
Scene 2: rents above $500 per month, giving priority to landlords for billing (most compliant)
This is the most economical way in which a large number of landlords refuse to sign out, at the core of which is fear of trouble or want to pay taxes, which are simple personal billing processes and not as high as they would imagine。
Let's get this straight
Types of taxes and fees
Value added tax reduced to 1. 5 per cent
Property tax 4% housing, 12% non-housing (half of parts)
Individual income tax approved 0. 5 to 2 per cent based on local tax administration calibre
Taken together, the monthly rent of $10,000 for residential accommodation and the billing fee of $200-300 are well below the $2,500 overbilled corporate income tax。
Billing exercise process (may be undertaken)
1. Preparation materials: original landlord's identity card, copy of the property certificate, lease contract
2. Delegation of authority by the chargé d ' affaires: if the landlord does not have time, write a power of attorney, which may be delegated by the employee of the company
3. Place of dealing: a tax service office located in the premises where a regular vat invoice can be issued on site, with an automatic reference to the real estate address in the observation column
Recording deductions: once invoices are received, they are normally charged to “management costs—rent”, deducted prior to full tax, without risk。
Scene 3: landlords are so uncooperative that they can't get their hair. Tickets
This situation can also be accounted for, provided that “first recorded and then increased” is prepared。
• accounting treatment: the normal process of debiting “management costs—rent” to “bank deposits” to ensure consistency
• tax treatment: at the time of the liquidation of the enterprise income tax, the full amount of this rent is increased by tax and the enterprise income tax is replenished at tax rates。
Critical reminder: the payment of rent must be made from the company's public account to the landlord's personal account, and never with cash or employees' private accounts! Public transfer records are the central basis for proving the authenticity of the business, even if there are no invoices, contracts + transfer records, and tax audits are able to clarify the situation and avoid being identified as “false expenses”。
Two practical techniques to reduce risk and save money
-technology 1: write down the invoicing clause and avoid subsequent ripping
Add this to the lease contract:
The rent under this contract is in the amount of no tax and taxes arising from the lease, such as value added tax, property tax, etc., are borne by the lessee. Within five working days of receipt of the rent, the landlord shall cooperate with the tax authorities in issuing ordinary vat invoices. The lessee is entitled to a direct deduction from the next rent of 120 per cent of the tax deductible, if the delay in providing it makes it untaxable。
Skills 2: proof substitution for special scenarios
• subletting operations: no billing by the upstream landlord, recorded on the basis of a copy of the original lease contract, fee-splitting, upstream receipt voucher, which indicates the basis of the apportionment and is stamped with the company's stamp
• tenant government/enterprise property: if the counterparty is unable to issue a vat invoice, it is recorded on the basis of financial notes or receipts, while retaining a copy of the certificate of ownership of the property。
Three or four common error zones
1. Misdirection i: not recorded without invoices
It was a big mistake that rent was a real expense of the company and that failure to account for it could lead to a distortion of the financial statements, which could give rise to tax concerns. The correct approach would be to record it first, followed by a mandatory tax increase。
2. Misdirection ii: catering, fuel invoices rental
Such “talented” amounts to a false bill, which, if checked, may involve not only the payment of taxes, but also a fine and serious criminal liability。
3. Misdirection iii: one-time deduction of rent over the year
Disbursements, whether invoiced or not, are shared over the years on an accrual basis. For example, the following year's rent was paid in december, with amortization of 12 months, the uninvoiced portion, and tax increases were applied to the amortization。
4. Mistake iv: invoices after payment of remittances are useless
Useful. Tax increases were made at the time of payment of the remittances, followed by compliance invoices within five years and the recovery of rent deductions prior to the annual tax, an application for revision of the declaration form and refund of the excess tax。
Iv. The last sentence advises: never touch the red line
Don't even think about falsifying the landlord's identity card, the property card, or getting someone to write a false invoice! Forgery of official documents of state bodies is punishable by up to 10 years ' imprisonment, and the issuance of false invoices is subject to high fines and criminal liability, with the aim of saving tax revenues。
In fact, to address the landlord's refusal to sign, the core is “advance communication + compliance”. Prior to the signing of the contract, the invoice requirement was made clear and the liability for taxes and fees was written into the contract; in the absence of the invoice, the required recording and tax increases were made, and all documents proving the business were kept. This would neither result in unnecessary losses to companies nor avoid tax risks。
In conclusion, i would like to ask you: have you ever encountered a refusal by the landlord to sign up when you rented a house? How did it end? If it were you, would you choose to take the tax bill for the landlord, or would you do a direct tax raise
