The transfer of state-owned assets as a special change of title facilitates the rational allocation of resources in the state-owned asset system and increases resource utilization. In accordance with the relevant laws and regulations, and taking into account the experience of the project, this paper will provide an overview of the policies and fiscal procedures governing the transfer of state-owned assets of enterprises。
The transfer of enterprise state-owned assets is divided into reimbursable and pro bono transfers. The specific policy basis and accounting treatment are set out below。
I. Reimbursable transfers: 100 per cent transfer of shares or assets held by the parent to the subsidiary in net book value and 100 per cent payment by the parent to the subsidiary
1 state-owned asset transfer policy:
Section iii, paragraph 63, of the regulations for the supervision of state-owned assets transactions in sichuan enterprises stipulates that the external transfer of assets such as production equipment, property, construction work in progress and land use rights, claims and intellectual property rights of enterprises shall be made public after the corresponding decision-making procedures are carried out in accordance with the internal management system of the enterprise. The transfer of the net book value of the assets or the assessment of the value of the assets above $1 million should be made publicly available at the equity transaction. Transfers involving assets within state-financed enterprises or in particular industries, which are to be carried out in private between state-owned and state-owned holdings and state-controlled enterprises, are to be submitted by the transferring party to state-funded enterprises for approval。
Article 48 of the act on the supervision and regulation of state-owned assets transactions of enterprises: foreign transfers of production equipment, real estate, construction work in progress and assets such as land use rights, claims and intellectual property over a certain amount of money shall be made publicly available to property exchange agencies after the corresponding decision-making procedures are carried out in accordance with the enterprise's internal management system. Transfers involving assets within state-financed enterprises or in particular industries, which are to be carried out in private between state-owned and state-owned holdings and state-controlled enterprises, are to be submitted by the transferring party to state-funded enterprises for approval。
2 policies related to financial processing:
Article xi of the enterprise accounting standard 4 - fixed assets provides that the cost of investment of fixed assets by an investor shall be determined in accordance with the value agreed in the investment contract or agreement, except where the contract or agreement provides for an unfair value。
Eas 6 - intangible assets, article xiv,c provides that it shall be determined according to the value agreed in the investment contract or agreement, unless the contract or agreement provides that the value is unfair。
Eas 7 - non-monetary asset exchange provides that the accounting treatment of an equity transaction applies to a party in which a non-monetary asset exchange is carried out by the party directly or indirectly holding shares with the other party and trading as a shareholder, or in which the exchange of non-monetary assets is subject to the ultimate control of the same party or the same party, and where the transaction in which the non-monetary asset exchange is in substance made by the other party to which the exchange was made subject to an equity allocation or exchange。
A long-term equity investment was exchanged for non-monetary assets that enterprises used to finance. The financing of non-monetary assets of wholly-owned subsidiaries should be considered as a non-monetary exchange of assets without commercial substance, as the transaction does not alter the economic resources that the parent company can control and the risk and reward characteristics that do not result in substantial changes in the amount, time and risk of future cash flows. Even if the way cash flows are obtained is to move from a direct acquisition of operating cash flows to a shareback from a subsidiary, the underlying cash flows from which the subsidiary distributes cash dividends continue to arise from the asset and the amount, time and risk of future cash flows will not change substantially if the use of the related assets has not changed substantially compared to the previous contribution。
In accordance with eas 7 - non-monetary asset exchanges, the group should at this time not recognize gains or losses or changes in capital build-up as the initial cost of long-term equity investments based on the original book value of the assets invested and the sum of the associated taxes and charges. The investing enterprise (project company) accepts non-monetary asset financing and can still be recognized at the initial measure as the received capital and capital premium at the assessed value。
Ii. Non-reimbursable transfer: between 100 per cent of directly controlled parent subsidiaries, where the parent transfers its holdings or assets to the subsidiary in net book value, the parent company does not receive any equity or non-equity payments。
1 state-owned asset transfer policy:
In accordance with chapter iii, article 12, of the national investment commission's interim scheme for the regulation of non-remunerated transfer of state-owned property of enterprises, state-owned property of an enterprise is subject to approval by the jointly financed enterprise's supervisory authority for transfers between enterprises financed by the supervisory authority of the same state. Article 21 provides for the non-reimbursable transfer of assets such as physical assets of an enterprise to this scheme。
2 policies related to financial processing:
Consistent with the first scenario in accounting treatment, such pro bono transfers can in fact be understood as donations, in accordance with the notice of the ministry of finance for good practice in implementing the accounting standards enterprise's annual report 2008 (cofa) (2008) 60) provides that contributions and debt waivers accepted by enterprises that meet the requirements for recognition in accordance with accounting standards should normally be recognized as current earnings. If the donation is received directly or indirectly from the controlling shareholders or the subsidiary of the controlling shareholders, the capital input of the controlling shareholders to the enterprise, in economic terms, shall be treated as an equity transaction and the related benefit shall be included in the owner's interest (capitalization)。
Tax-related policies:
1. Enterprise income tax policy: special tax treatment may be applied, i. E. The transfer of the proceeds of an equity transfer that is not recognized by the parties and that is not profit or gain based on the additional investment cost and tax basis of the recipient, based on the book value of the unit originally invested in the group. According to the financial tax [2014] 109: iii. On equity, asset transfer: a transfer of equity or asset at net book value between enterprises with 100 per cent direct control, and between enterprises with 100 per cent direct control of the same or the same number of residents, for a period of 12 months following the transfer that has a legitimate business purpose and that does not reduce, exempt or delay the payment of taxes, without changing the original business activity to which the equity or asset has been transferred, and without the accounting recognition of the gain or loss by both the author and the recipient, an option may be made for special tax treatment as follows:
1 the proceeds are not recognized either by the author enterprise or by the author enterprise。
2 the crediting enterprise acquires the tax basis on which the transferred equity or asset is based, as determined by the original net book value of the transferred equity or asset。
3 the transferred assets acquired by the assigned enterprise are subject to depreciation based on their original net book value。
2. Value added tax. Circular of the ministry of finance of the national tax administration on the full roll-out of the vat pilot article 1 (b) of annex 2 on matters related to the conversion of the turnover tax to the vat pilot provides for the transfer of all or part of the physical assets, as well as the claims, liabilities and labour associated with them, to other units and individuals in the course of the asset reorganization, through consolidation, separation, sale, replacement, etc., in which no vat is levied on real estate, land tenure transfers. This document limits the non-taxability of vat for non-reimbursable transfers to the extent that the transfer of assets such as real estate, land use rights will be linked to the transfer of claims, liabilities and labour. Otherwise, companies transferring immovable property to other companies on a pro bono basis would have to pay vat on the same basis as sales。
