Some students asked: How to deal with the tax if it is regarded as selling goods?Now I would like to talk to you on this topic. Due to the limited level, if there is anything inappropriate, please also ask Haihan, and please correct. Text: Li Xian
We have discussed the tax treatment of deemed sales of goods many times before. Today, at the request of readers and friends to leave a message in the background, I will discuss with you an example of this topic.
[Case].M Holding Company holds 80% of the shares of M1 Company (which is a general VAT taxpayer) and 100% of M2 Company (which is a general VAT taxpayer). In December 2023, M1 acquired 100% of the equity of M2 Company, with a book value of 10 million yuan and a fair value of 10,000 yuan on the merger date. M1 paid consideration of $10 million for bank deposits, $4 million for inventory and $6.78 million for fair value. On the date of the merger, the capital reserve of M1 company - the capital premium was 7 million yuan. Please analyze the accounting and tax treatment of this business of M1 company.
[Case Analysis].In this case, the inventory was used as the payment consideration, and the VAT and enterprise income tax treatment should be carried out according to the law as deemed sales of goods.
1. Accounting treatment
Borrow: Long-term equity investment - M2 company 10 million yuan.
Capital reserve - capital premium of 4.78 million yuan.
Credit: Bank deposit of 10 million yuan.
Inventory of goods 4 million yuan.
Tax payable - VAT payable (output tax) 78 (=678 1.)13*13%）
2. Tax treatment
1.VAT:M1 Company took the inventory at a fair price of 6.78 million yuan as the payment consideration, and should be treated as a deemed sales goods for value-added tax, and the output tax of 780,000 yuan was recognized.
Regulatory basis:Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Value-Added Tax (Decree No. 50 [2008] of the Ministry of Finance and the State Administration of Taxation).
Article 4: The following acts of units or individual industrial and commercial households:Deemed to be a sale of goods
6) Providing self-produced, commissioned processing or purchased goods to other units or individual industrial and commercial households as investment;
According to the above provisions, M1 Company (a general VAT taxpayer) shall declare and pay VAT of 780,000 yuan and its additional taxes at a rate of 13% according to the provisions with a VAT price of 6.78 million yuan as the payment consideration.
2.Corporate Income Tax:If the ownership of the asset has changed and it is not an internal disposal asset, the income shall be determined as a sales in accordance with the regulations, and the sales revenue shall be determined according to the fair value of the transferred asset.
M1 Company shall recognize the revenue of 6 million yuan from deemed sales of goods and the cost of deemed sales of goods of 4 million yuan according to the inventory of 6.78 million yuan as the consideration for payment.
The tax basis of long-term equity investment in M2 should be recognized as 16.78 million yuan (= 1000 + 600 + 78).
Regulatory basis:Notice of the State Administration of Taxation on Issues Concerning the Income Tax Treatment of Assets Abandoned by Enterprises (Guo Shui Han 2008 No. 828).
Bottom line: If an enterprise uses inventory as the payment consideration, the value-added tax income and enterprise income tax income shall be recognized according to the deemed sales of goods, and the corresponding tax treatment shall be carried out.