Vat tax policies are more friendly to support enterprise asset restructuring。
On 2 february, the ministry of finance and the general tax administration issued a bulletin on matters related to value added tax credits (hereinafter referred to as the proclamation), which clarified the scope of non-taxation of value added tax (vat) in the context of asset restructuring and matters related to the crediting of incoming taxes。
According to the proclamation, a taxpayer who carries out a reorganization of assets through consolidation, separation, sale or replacement, while meeting the four main conditions, and which are not subject to non-taxable transactions as provided for in article 22 of the regulations on the application of vat taxes and vat laws, is involved in the transfer of goods, financial goods, intangible assets, immovable property (hereinafter referred to as assets) without vat, and the corresponding revenue tax may be deducted from the sales tax as prescribed。
In comparison with previous policies, the bulletin makes it clear that transfers of intangible assets other than financial goods and land use rights in asset restructuring can be subject to value added tax (vat)-free policies. Previously, this non-value-added tax had only defined goods, real estate and land use rights。
The assistant professor of the shanghai national school of accounting told the first financial bank that, in subsequent eligible asset restructurings, financial goods such as intangible assets such as brand names, stock bonds and related claims, liabilities and employees were transferred with no explicit vat。
“the scope of non-taxation of asset reorganization has evolved over time, with the previous vat system focusing on goods, real estate and land use rights only, but in practice, asset reorganization” while intangible assets, such as trademark rights, are often involved in the process of package transfers, since previous policies did not explicitly provide for non-taxation of intangible assets, many local tax authorities strictly enforced the imposition of vat on intangible assets, etc., to some extent increased the tax on the reorganization of business assets. And this time, the non-tax scope was extended to make it more reasonable.” goh yu said。
With economic and social development, the value and importance of intangible assets, such as enterprise brands, intellectual property rights, franchising, customer relations, data assets, and so forth, have increased to the core competitiveness of many enterprises。
According to chon, the exclusion from vat taxation of transfers of assets, including intangible assets, in this proclamation would reduce the vat burden in reorganization and encourage business mergers and acquisitions. The policy adopted non-tax, rather than tax exemption, because the corresponding revenue tax would need to be transferred out of the tax, while the former non-tax revenue would normally be deducted. For the recipient of the assets, subsequent transfers, without taxes, are taxed only, and national tax interests are not lost。
In addition to extending the non-taxable scope of the asset reorganization, the proclamation also made it clear that the amount of its revenue to be paid could be deducted from the sales tax as required。
According to goyu, the reorganization of assets, which clearly meets the requirements of the proclamation, is not a “non-taxable transaction”, thus allowing for a normal crediting of the relevant revenue, which would facilitate the reorganization of business mergers and acquisitions and would be in line with the current policy trend of the state to promote reorganization and consolidation in related areas。
Of course, in order to benefit from the above-mentioned preferential policies, the four conditions mentioned in the aforementioned proclamation must be met simultaneously:
:: reorganization of assets is the subject of relatively independent operations。
:: taxpayers, in the case of asset reorganization, shall transfer all or part of the assets together with the corresponding claims, liabilities and employees associated with them. Assets, claims, liabilities and employees should be included in the package。
:: reorganization of assets should have a legitimate commercial purpose and not be primarily aimed at reducing, exempting, delaying or pre-refunding vat or over-refunding。
:: the transferee of the reorganization of assets is a general taxpayer and the recipient should also be a general taxpayer。
The proclamation also makes it clear that taxpayers are consolidated for the reorganization of the above-mentioned assets, that they register the cancellation of taxes, and that the amounts of incoming taxes that have not been deducted prior to the cancellation of the registration may continue to be deducted by the consolidated taxpayers。
