The accounting method of enterprise income tax refund is generally divided into the following steps:
Record tax refund income: When an enterprise receives a tax refund from the tax authority, it should record the income in an asset account such as "accounts receivable" or "bank deposits".
Reversal of income tax expense: The enterprise should reverse the income tax expense corresponding to the tax refund amount and credit the "income tax expense" account to reflect the reduction of the actual income tax expense.
Adjust undistributed profits: Because tax refunds affect the undistributed profits of the business, the Undistributed Profits account needs to be adjusted to reflect the actual profit distribution.
Illustrate. Suppose that enterprise A conducts final settlement after the end of 2022 and finds that the actual amount of enterprise income tax paid is 1 million yuan, and the payable amount is 800,000 yuan, so it applies for a tax refund of 200,000 yuan from the tax authorities. The specific operation process is as follows:
A enterprise received a tax refund of 200,000 yuan from the tax authorities, which was credited to the "bank deposit" account, and the bank deposit was increased by 200,000 yuan.
Enterprise A will reverse the income tax expense corresponding to the tax refund of 200,000 yuan and credit it to the "income tax expense" account, reducing the income tax expense by 200,000 yuan.
Since the tax refund will affect the undistributed profit of enterprise A, it is necessary to adjust the "undistributed profit" account and increase the undistributed profit by 200,000 yuan.
Enterprises need to comply with the following regulations when processing the final settlement and refund of corporate income tax:
Principle of legality: Enterprises must ensure that the tax refund application complies with the provisions of relevant tax laws and regulations, and there can be no violations of laws and regulations.
Principle of accuracy: Enterprises must ensure the accuracy of the data when processing tax refund accounts, and there can be no errors or omissions.
Principle of timeliness: Enterprises should deal with the tax refund in a timely manner after receiving it, and should not delay or backlog the accounting processing work.
Principle of integrity: When dealing with tax refund accounts, enterprises must ensure the integrity of relevant vouchers and materials, and cannot miss important information or documents.
Principles of tax auditing: Enterprises should cooperate with the tax authorities in conducting audits and verifications, and provide necessary information and explanations.