Income Tax Clearance Report

The liquidation report required by the tax authority generally refers to the certificate of cancellation of tax registration issued by a tax agency (or an accounting firm), which includes the audit and certification of various taxes and fees for the first three years before the liquidation commenced, as well as the audit and certification of taxes and fees during the liquidation period. (Income Tax Liquidation) It includes: company's basic information, reason for cancellation, specific start and end dates of the liquidation, members of the liquidation team, gains and losses from the disposal of assets and liabilities during the liquidation period, confirmation of gains and losses generated by the liquidation, and confirmation of whether various taxes were generated during the liquidation. For details, please consult a local tax agency or accounting firm.

Income Tax Clearance Regulations and Precautions

The new "Enterprise Income Tax Law" and its "Implementation Regulations" have been officially implemented. 2008 marks the first year of transition between the new and old Enterprise Income Tax Laws. The State Council, Ministry of Finance, and State Administration of Taxation have successively issued a series of supporting and supplementary documents. The implementation of these supporting tax policies will directly affect a company's annual operating performance and the amount of corporate income tax payable. Additionally, there have been significant changes to the new "Enterprise Income Tax Return Form," which has been officially promulgated.

Cautionary Notes

Key Principles to Focus on for Tax and Finance Personnel in Actual Taxation Operations

Principle of Rationality

Precautionary principle

Principle of Clarity in Tax Handling

Tax and accounting differentiated treatment principles

Principle of Controllable Tax Risks

Principles of Multidimensional Understanding of Tax Regulations

Overall design and filing approach of the new tax declaration form

Reporting of income items and tax adjustments

Revenue Tax Classification

Tax Treatment of Subsidy Income

Policy Changes Affecting Sales Revenue Treatment

Tax Adjustments for Various Revenue Items

Income Statement Tax Return Filing for Each Revenue Item

Cost and expense item reporting and tax adjustments

Changes in Cost Item Disbursement Policy

Cost item declaration forms submission

Policy changes regarding salary and three-item fund expenditures, tax adjustments, and the completion of tax return forms

Policy changes for business entertainment expenses, tax adjustments, and completion of the tax return form

Policy changes on advertising and business promotion expenses, external donations, sponsorship expenditures, tax adjustments, and form filings

Various insurance expenses, travel expenses, labor protection expenses, etc., listing conditions and declaration form requirements

Cost allocation for expenses incurred due to inability to obtain invoices

Pre-tax deduction issues for some special expense items of the company

Reporting of asset items and tax adjustments

Understanding of the "Taxable Basis" of Assets

Policy changes in fixed asset depreciation, tax adjustments, and tax return filing

Depreciation treatment for fixed assets from previous years, which have changed in depreciation periods under the new regulations.

Policy changes in amortization of intangible assets, tax adjustments, and form filing

Policy changes in the amortization of long-term deferred expenses, tax adjustments, and filing of tax returns

Tax policy and form filling for asset valuation at fair value

Corporate Restructuring Tax Treatment, Folding

The principle of "neutralization" in tax treatment during corporate restructuring

Corporate restructuring tax adjustments

Tax incentives and tax return filing for enjoying the incentives

Tax incentives and corporate utilization under the new tax law

Tax incentive program application form completion

Considerations for Corporate Income Tax Planning

Policy changes and form filling for offsetting previous-year losses

Changes in Loss Compensation Policy

Make-up for previous year's losses reporting

Considerations for tax planning using operating losses

Tax credit policies and form filling for overseas income

Direct and Indirect Tax Deduction Policies Explained

Filling out forms related to overseas income declarations

Tax policies and form completion regarding overseas investment losses and gains

Dividend and bonus investment income tax treatment

Tax treatment of investment transfer gains and losses

Principles of Tax Treatment and Filing Procedures for Special Tax Adjustments

Primary tax avoidance methods employed by the company

Main Methods for Countering Tax Evasion

Summary of tax policies and declaration form filing for total branches and subsidiaries

Summary of Taxation Policy Interpretations

We have first adopted the consolidated tax payment method for the accumulated losses of previous years, prior to the establishment of branch and subsidiary reporting.

Audit issues for summarized tax payment

Summary Tax Declaration Form Filling

Policy Changes in Tax Administration

Meaning and Filling of Supporting Documents for Tax Return

Changes in declaration deadlines and final settlement periods

Income Tax Clearance Case

The balance sheet as of the date of cessation of business and production for the company states: Book value of assets is 33.6 million yuan, tax base of assets is 38.9 million yuan, realizable net value of assets is 42.3 million yuan, book value of liabilities is 37.5 million yuan, tax base of liabilities is 37 million yuan, and the amount paid to settle liabilities is 35.9 million yuan. During the liquidation period, the company paid liquidation expenses of 0.7 million yuan, employee resettlement fees and legal compensation of 1 million yuan, and related taxes and fees during the liquidation process amount to 0.2 million yuan. There is a loss of 1 million yuan that can be carried forward from previous years.

Settlement income = 4,230 (realizable net value of assets) - 3,890 (taxable basis of assets) - 70 (settlement expenses) - 20 (related taxes and fees) + (3,700 - 3,590) gain or loss on debt settlement - 100 (compensation for losses in previous years) = 260,000 yuan

Withholding income tax = 260 × 25% = 65 (10,000 RMB)

The remaining property distributable to the enterprise owner = 4,230 (net realizable value of assets) - 70 (liquidation expenses) - 20 (related taxes and fees) - 100 (employee wages, social insurance, legal compensation) - 65 (liquidation income tax) - 3,590 (debt repayment) = 385 (10,000 RMB)