After the parent company establishes a subsidiary, it shall pay enterprise income tax, value-added tax and other taxes on time in accordance with the provisions of tax laws and regulations. The parent company shall incorporate the dividends, bonuses and other income it obtains from the subsidiary into its taxable income and pay enterprise income tax; Subsidiaries are required to pay corporate income tax and value-added tax on a regular basis based on the profits generated by their operations. In terms of tax planning, the parent company can consider reducing the overall tax burden by reasonably adjusting the equity structure of the subsidiary and taking advantage of preferential tax policies.
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1. How to pay taxes when the parent company establishes a subsidiary? There are 4 tax processing links involved.
2. What are the conditions for the parent company to establish a subsidiary? Achieve legal, compliant, and efficient operations
3. What is the process of establishing a subsidiary of the parent company? There are 7 key steps involved.
1. How does the parent company pay taxes when it establishes a subsidiary? There are 4 tax processing links involved.
1. Enterprise income tax.
According to the Enterprise Income Tax Law, the parent company and the subsidiary are required to file and pay the enterprise income tax separately. The parent company and the subsidiary are two independent taxpayers, each with its own tax liability.
Parent company: The parent company needs to calculate the corporate income tax based on its business income and other income, and declare and pay it to the tax authorities. The parent company can deduct the tax basis of the subsidiary's dividends in the corporate income tax.
Subsidiary: Subsidiaries are required to calculate corporate income tax based on their operating income and other income, and declare and pay it to the tax authorities. A subsidiary can include the parent company's investment in its corporate income tax base.
2. Value added tax.
According to the Interim VAT Regulations, the parent company and the subsidiary are two separate taxpayers and pay VAT separately.
Parent company: When the parent company sells goods or provides services, it needs to collect VAT output tax from the buyer and pay VAT.
Subsidiary: When a subsidiary buys goods or receives services from the parent company, it is required to pay VAT input VAT and pay VAT.
3. Other taxes.
In addition to corporate income tax and VAT, the parent company and subsidiary may also be involved in other taxes, such as personal income tax, land appreciation tax, etc. The payment and treatment of these taxes also need to be carried out in accordance with the relevant tax laws.
4. Tax planning.
After the parent company establishes a subsidiary, it can reduce the overall tax burden through reasonable tax planning. For example, subsidiaries can be set up in preferential tax policy areas and enjoy preferential tax policies; Profits can be transferred between the parent company and the subsidiary through reasonable pricing; Take advantage of the state's preferential tax policies for high-tech enterprises, etc.
2. What are the conditions for a parent company to establish a subsidiary? Achieve legal, compliant, and efficient operations
1. Company law.
Existence of a parent company: First of all, a company that has been legally registered and exists is a prerequisite for the establishment of a subsidiary.
Registered capital requirements: The parent company must have sufficient registered capital to ensure that it has the financial capacity to support the subsidiary's operations.
Clear shareholding structure: The shareholding structure of the parent company must be clear, and the identities and capital contributions of all shareholders must be clearly recorded.
Corporate governance structure: The parent company needs to have a sound corporate governance structure, including the board of directors, the board of supervisors and other necessary institutions.
2. Tax level.
Tax compliance: The parent company must be tax compliant and have no unresolved tax issues to avoid tax issues affecting the subsidiary's registration.
Tax planning: The parent company needs to carry out reasonable tax planning to reduce the tax burden of the subsidiary after its establishment.
Tax incentives: If the parent company wants the subsidiary to enjoy specific tax incentives, it must do enough research before the subsidiary is established.
3. Other conditions.
Business relevance: The parent company should consider business relevance when establishing a subsidiary to ensure that the subsidiary's business is coordinated with the parent company's business to avoid business conflicts.
Market considerations: Before establishing a subsidiary, the parent company should consider factors such as the market environment and competitive situation to determine the business scope and market positioning of the subsidiary.
Human resources: The parent company needs to equip the subsidiary with the necessary management personnel and employees to ensure the normal operation of the subsidiary.
Legal compliance: In addition to corporate and tax laws, the parent company also needs to ensure that the establishment of the subsidiary complies with the requirements of other relevant laws and regulations.
3. What is the process for the parent company to establish a subsidiary? There are 7 key steps involved.
1. Determine business needs and goals.
Before deciding to set up a subsidiary, the parent company needs to clarify the business needs and goals. This includes analyzing market opportunities, determining the scope of the subsidiary's business, considering aspects such as resource allocation and financial budgeting.
2. Conduct market research and business plans.
Market research is a key part of setting up a subsidiary, involving the understanding of the target market, the analysis of competitors, and the needs of potential customers. Based on this, a business plan is developed to clarify the subsidiary's positioning, strategic planning, and operating model.
3. Register a subsidiary.
After completing the market research and business plan, the parent company needs to submit relevant registration materials to the local administration for industry and commerce, including pre-approval of the company name, submission of shareholder information and registered capital, etc. After obtaining the business license, the subsidiary is officially established.
4. Set up an organizational structure and management team.
According to the business plan and business needs, set up the organizational structure of the subsidiary, including department settings, job responsibilities, etc. Establish a management team to be responsible for the day-to-day operation and management of the subsidiary.
5. Raise funds.
Depending on the size of the business and the investment plan, the parent company needs to raise enough funds to support the operation and growth of the subsidiary. This can be achieved through internal or external financing.
6. Operation and management.
After the funds are in place, the subsidiary begins to officially operate. At this time, it is necessary to establish a sound financial management, human resource management and risk management system to ensure that the subsidiary can operate efficiently and stably. The parent company needs to pay close attention to the operating conditions of the subsidiary and provide necessary support and guidance.
7. Continuous improvement and adjustment.
As the market environment changes and business develops, subsidiaries need to continuously adjust and improve their operational strategies. The parent company needs to regularly evaluate the operating conditions of the subsidiary and adjust the investment plan and resource allocation in a timely manner to maintain a competitive advantage.