The newly amended Company Law was passed on December 29, 2023 and will come into force on July 1, 2024. One of the biggest changes is that the registered capital of the company must be paid up within 5 years.
Although the company law clearly and specifically implements the specific implementation time on July 1, 2024, many small partners were in a hurry to reduce their capital as early as January, and there are many friends around them who directly and rudely reduced the company's registered capital of 1 million and 500,000 yuan to 50,000 or 30,000 yuan. Actually, there's really no need to be in such a hurry!
So, why don't old companies rush to reduce capital and paid-in registered capital? Latest! The State Administration for Market Regulation has issued a document! Let's learn along!
Don't worry about the old company! Paid-up capital of the companyYesTransition!
On February 6, the State Administration for Market Regulation issued an announcement on publicly soliciting opinions on the "Provisions on the Implementation of the Company Law of the People's Republic of China on the Registration and Management System of Registered Capital (Draft for Comments)", aiming at everyone's concernAfter the implementation of the New Company Law, specific provisions have been made on how to pay in the registered capital of existing companies. 
Make a point! 1. In accordance with Article 266 of the Company Law, a three-year transition period is set up, from July 1, 2024 to June 30, 2027. 2. If the capital contribution period of a company established before the implementation of the Company Law exceeds the time limit stipulated in the Company Law, it shall be adjusted during the transition period. 3. If the remaining capital contribution period of a limited liability company established before the implementation of the Company Law is less than five years from July 1, 2027, there is no need to adjust the capital contribution period; If the remaining capital contribution period exceeds five years, the remaining capital contribution period shall be adjusted to five years during the transition period. The adjusted shareholder's capital contribution period shall be recorded in the company's articles of association, and shall be announced to the public on the national enterprise credit information publicity system in accordance with law. 4. The shares established before the implementation of the Company Law shall be paid in full during the three-year transition period. 5. If a limited liability company established before the implementation of the Company Law fails to adjust the term of capital contribution during the transition period, the company registration authority may require it to adjust the term of capital contribution within 90 days in accordance with the law, and the term of capital contribution shall not exceed five years from July 1, 2027. 6. For companies established before the implementation of the Company Law, with a capital contribution period of more than 30 years or a capital contribution of more than 1 billion yuan, the company registration authority may study and judge the authenticity of the registered capital in light of the shareholders' capital contribution capacity, main projects, asset scale, etc. The company registration authority may require the company to provide an explanation of the situation, or may organize an industry professional institution to conduct an assessment, or negotiate with the relevant departments to determine that there are indeed obvious abnormalities in the company's capital contribution period and capital contribution, and with the consent of the provincial market supervision and administration department, it may require it to adjust the capital contribution period and capital contribution amount within six months in accordance with the law, and the adjusted capital contribution period shall not exceed five years from July 1, 2027. 
Why not rush? A few cases to tell you!
Case 1:Company A is a stock limited liability company, and before the implementation of the new company law, the articles of association stipulated that the registered capital should be fully paid up before 2040, and there is still a part of the company's capital that has not been paid up.
Q: According to the content of the Consultation Paper, how to adjust the capital contribution period of the company's registered capital?
[Analysis].
Before June 30, 2027, Company A shall amend the articles of association of the company, stipulating that the payment period of the company's remaining registered capital shall not exceed July 1, 2032 (no more than 5 years from July 1, 2027), and shall be publicized to the public in the national credit company system.
If Company A does not make adjustments before June 30, 2027, the company registration authority may require it to adjust the capital contribution period within 90 days in accordance with the law. Case 2:Company B is a stock limited liability company, and before the implementation of the new company law, the articles of association stipulated that the registered capital should be fully paid up before 2029, and there is still a part of the company's capital that has not been fully paid.
Q: According to the Consultation Paper, how should Company B adjust the capital contribution period of the company's registered capital?
[Analysis].
Since the articles of association of Company B stipulate that the registered capital shall be fully paid up before 2029, and the remaining capital contribution period calculated from July 1, 2027 is less than five years, Company B does not need to adjust the capital contribution period.
Case 3:Company C is a stock share***, and there are still some shareholders whose shares have not been paid in full.
Q: According to the Consultation Paper, how should Company C adjust its share capital?
[Analysis].
Company C shall fully pay up the company's share capital by June 30, 2027. Case 4:Company D is a stock limited liability company, and all the registered capital of the company has been fully paid up before the implementation of the new company law. At present, the company is preparing to increase the registered capital.
Q: According to the content of the draft for comments, how to pay the new registered capital of Company D? Analysis] The new registered capital of Company D should be paid up in full within 5 years.
The old company reduced and divested its capitalHowDoing tax treatment? Does the company have to pay tax on capital reduction? The New Company Law stipulates that a registered company must be paid in place within 5 years, and at present, if the term and amount of capital contribution are obviously abnormal, the registration authority may require it to adjust it in a timely manner in accordance with the law. Under the requirements of the new company law, many bosses are considering reducing their capital, and one of the questions asked me the most in private messages in the past two days is:Do I have to pay tax on capital reduction? Reply here in a unified manner:In the case of full subscription of registered capital, the normal capital reduction does not need to pay tax. I also saw many articles writing that "20% tax must be paid for capital reduction", which is one-sided! Not for most companies. If we do not involve the company's undistributed profits, do not involve real money, and do not transfer back to shareholders, then there is no issue of paying taxes. If you apply for capital reduction of the subscribed registered capital, as long as you do not take money from the company, you can only do publicity and change registration. If the registered capital of the company is paid-in, and the capital reduction is the paid-in part, that is, in the process of capital reduction, the original paid-in money needs to be taken, and the money taken exceeds the original paid-in money, then this part needs to pay individual income tax. Case Study 01
and Mr. Liu jointly subscribed and contributed 5 million yuan to establish a limited liability company, accounting for 60% of the shares, and Mr. Liu accounted for 40% of the shares, each with a paid-in capital of 2 million yuan according to the proportion of shareholdings. The company has been operating poorly, and its net assets are 100,000 yuan after evaluation in December 2023. In January 2024, Mr. He Liu plans to reduce the subscription by 3 million yuan, and the shareholding ratio of each shareholder will remain unchanged after the capital reduction. Q: How does Mr. Liu pay individual income tax?
Analysis:withMr. Liu will subscribe to reduce the capital by 3 million yuan, and the shareholding ratio of each shareholder will remain unchanged after the capital reduction, indicating that the shareholders will reduce the subscribed capital contribution in equal proportions, and Mr. Liu has not actually obtained funds from the limited liability company. Therefore, Mr. Liu does not need to pay individual income tax.
Summary:Individual shareholders who subscribe for capital reduction in equal proportions, and the amount of capital reduction does not exceed the difference between the subscribed capital contribution and the paid-in capital, and do not obtain cash, in-kind and other economic benefits from the invested enterprise, shall not pay individual income tax.
Case Study 02
and Mr. Liu jointly subscribed and contributed 5 million yuan to establish a limited liability company, accounting for 60% of the shares, and Mr. Liu accounted for 40% of the shares, each with a paid-in capital of 2 million yuan according to the proportion of shareholdings. The company has been operating in debt, and its net assets after evaluation in December 2023 are 4 million yuan. In January 2024, Mr. He Liu plans to reduce the subscription by 3 million yuan, and the shareholding ratio of each shareholder will remain unchanged after the capital reduction. And from the limited liability company according to the proportion of capital reduction to obtain cash: 1.8 million yuan, Mr. Liu obtained 1.2 million yuan.
Q: How does Mr. Liu pay individual income tax?
Analysis: Individual income tax needs to be paid = [1.8 million - 1.2 million (previously paid)] * 20% = 120,000 yuan.
Mr. Liu needs to pay individual income tax = [1.2 million - 800,000 yuan (paid before)] * 20% = 80,000 yuan.
If the shareholder reduces the capital in equal proportion and the amount of the capital reduction is greater than the investment cost, the capital reduction of the natural person shareholder shall be subject to 20% of the income from property transfer according to the income from the capital reduction.
Therefore, on the question of whether to pay tax for capital reduction, we have to decide according to the actual situation of the company.
There are two prerequisites for reducing capital and paying taxes:
First:The registered capital of the company is both paid-in and subscribedWhen the capital is reduced, the paid-in part is reduced, and the subscribed part is also reduced, so there will be a reduction in the paid-in registered capital.
Second:The company has undistributed profitsIf the undistributed profits are redistributed when the paid-in registered capital is reduced, there is a possibility that taxes may be paid.
There are also differences in capital reductions for different types of shareholders1. Capital reduction of corporate shareholders.
2. Capital reduction of natural person shareholders.
If the shareholders of the company only reduce the nominal registered capital and do not obtain income from the invested enterprise, it is generally only a change in industrial and commercial registration, and the accounting does not need to be dealt with, and it is generally not involved, but it needs to be judged according to the situation!
(1) Individual shareholders reduce their capital and withdraw their capital
There is a need to distinguish between situations.
OneThe amount recovered from the divestment> investment costs
It is necessary to pay taxes, and individual income tax is paid according to the item of "income from property transfer".
Taxable income = income from equity transfer obtained by the individual - the original actual capital contribution (investment amount) and related taxes and fees.
Note:
1. Equity income is a full-caliber income, including not only the equity transfer price, but also the compensation and liquidated damages and other off-price income.
2. For the transfer of investment shares of unincorporated enterprises, individual income tax shall be treated as equity transfer.
Policy Basis:
The announcement of the State Administration of Taxation on the issue of levying individual income tax on the proceeds recovered from the termination of investment and operation (Announcement No. 41 of 2011 of the State Administration of Taxation) stipulates that if an individual terminates investment, joint operation, business cooperation and other acts for various reasons, and obtains equity transfer income, liquidated damages, compensation, compensation and other amounts recovered from the invested enterprise or cooperative project, other investors of the invested enterprise and the operating partner of the cooperative project, etc., all belong to individual income tax taxable income and shall be subject to the " Income from property transfer" is calculated and paid individual income tax according to the applicable provisions. Case analysis: He Liu is always a shareholder of the company, the registered capital and paid-in capital are 1 million yuan, accounting for 50% each, up to now the company's undistributed profit of 10 million yuan, now to reduce the capital by 500,000 yuan, receive 5 million cash, how to deal with the company's accounting? Does the capital reduction involve individual income tax?
Accounting Processing:Borrow: paid-in capital - 500,000 yuan Profit distribution - undistributed profit 4.5 million yuan Loan: bank deposit 5 million yuan Does it pay individual income tax? 1.Equity transfer income obtained by individuals = 500 (10,000 yuan).
2.The original actual capital contribution (investment) = 100 50% = 50 (10,000 yuan).
3.Taxable income = the total amount of equity transfer income, liquidated damages, compensation, compensation and other recoveries obtained by the individual - the original actual capital contribution (investment) and related taxes and fees = 500-50 = 450 (10,000 yuan).
4.Individual income tax on income from property transfer = 450 20% = 90 (10,000 yuan).IIThe amount of divestment recovery is low but there is no justifiable reasonThe tax bureau has the right to verify the income from equity transfer and calculate and pay individual income tax.
Policy Basis:
According to the announcement of the State Administration of Taxation on the issuance of the Administrative Measures for Individual Income Tax on Income from Equity Transfer (Trial) > (Announcement No. 67 of 2014 of the State Administration of Taxation, hereinafter referred to as Announcement No. 67), the withdrawal of capital by individual shareholders is funded by the company, which is the company's recovery of equity, and it is also an equity transfer, and individual income tax needs to be calculated and paid according to the equity transfer.
IIIThe amount recovered from the divestmentThe cost of the investment, but for a valid reason
There is no need to pay personal income tax. Case analysis: He Liu is always a shareholder of the company, the registered capital and paid-in capital are 1 million yuan, accounting for 50% each, and the company's undistributed profit is 10 million yuan so far, and now it wants to reduce its capital by 500,000 yuan, which has a legitimate reason. After receiving 500,000 cash, how does the company deal with its accounting? Does the capital reduction involve individual income tax?
Accounting Processing:
Borrow: paid-up capital - 500,000 yuan.
Credit: Bank deposit of 500,000 yuan.
Reminder:
Since the divestment income does not exceed the initial investment cost,** although it is not fair, but there is a valid reason, there is no individual income tax involved in the capital reduction.
(2) The corporate shareholder withdraws and reduces the capital
To summarize it for you as follows:
Case analysis: Company A and Company B invested 4 million yuan and 6 million yuan respectively to register and establish Company C with a paid-in capital of 10 million yuan, due to various reasons, Company A withdrew from Company C according to the procedures and obtained 5 million yuan in cash, and when the capital was withdrawn, the undistributed profits of Company C were 800,000 yuan, the surplus reserve was 200,000 yuan, and the capital reserve was 1.5 million yuan. Does the divestment of Company A involve corporate income tax issues?
1. Accounting treatment: borrow: paid-in capital - 4 million yuan of company A, capital reserve of 1 million yuan, loan: bank deposit of 5 million yuan.
2. Enterprise income tax issues:
The assets withdrawn by Company A from Company C are divided into 3 parts:
1) The part equivalent to the initial capital contribution should be recognized as the investment recovery of 4 million yuan, and there is no enterprise income tax;
2) The part equivalent to the accumulated undistributed profits and accumulated surplus reserve of the invested enterprise calculated according to the proportion of reduced paid-in capital, 100 40% = 400,000, shall be recognized as dividend income and exempted from enterprise income tax;
3) The remaining part is recognized as the income from the transfer of investment assets, and the enterprise income tax needs to be paid.
Company A should pay enterprise income tax = (500-400-40) 25% = 150,000 yuan. 
Attached: Seven major changes in the New Company Law
Compared with the old version of the Company Law, the new Company Law mainly has the following aspectsSeven important changesOneThe registered capital of the companyFully paid within 5 yearsParagraph 1 of Article 47 The registered capital of a limited liability company shall be the amount of capital contribution subscribed by all shareholders registered with the company registration authority. The amount of capital contribution subscribed by all shareholders shall be paid in full by the shareholders within five years from the date of establishment of the company in accordance with the provisions of the articles of association.
Article 266, paragraph 2A company that has been registered and established before the implementation of this Law has a capital contribution period that exceeds the time limit specified in this LawExcept as otherwise provided by laws, administrative regulations or ***shall be gradually adjusted to within the time limit provided for in this Law; If the term and amount of capital contribution are obviously abnormal, the company registration authority may require it to adjust in a timely manner in accordance with the law. The specific implementation measures shall be provided by ***.
Make a point! The subscription system is changed to a time-limited payment system, and the scope of applicationThis includes not only newly established companies, but also existing companies.
IIContribution of non-monetary assetsArticle 48 Paragraph 1 Shareholders may make capital contributions in monetary terms, or in kind, intellectual property rights, land use rights, etcEquity, debt, etcNon-monetary property that can be valued in monetary terms and can be transferred in accordance with the law can be used as capital contributions; However, there is an exception for property that is not allowed to be used as capital contribution as stipulated by laws and administrative regulations.
Make a point! The provision that equity and debt rights may be contributed to the capital has been newly added, financial personnel should pay attention to.
IIIThe maturity of the subscribed capital contribution is acceleratedArticle 54 If the company is unable to pay off its debts when dueThe company or the creditor of the due creditor's right has the right to require the shareholders who have subscribed for the capital contribution but have not yet completed the capital contribution period to pay the capital contribution in advance.
Make a point! Although there is a 5-year capital contribution period, if the company is unable to pay off its debts as they fall due, in order to protect the interests of creditorsThe company or creditors have the right to require shareholders to pay capital contributions in advance
FourthShareholders can consult accounting documentsArticle 57, paragraph 2Shareholders may request to inspect the company's accounting books and accounting vouchers. If a shareholder requests to inspect the company's accounting books and accounting vouchers, he or she shall submit a written request to the company stating the purpose. If the company has a reasonable basis to believe that the shareholder's inspection of accounting books and accounting vouchers has an improper purpose and may harm the legitimate interests of the company, it may refuse to provide the inspection, and shall reply to the shareholder in writing and explain the reasons within 15 days from the date of the shareholder's written request. If the company refuses to provide inspection, the shareholder may file a lawsuit with the people's court.
Fifth, clarify the time of profit distributionArticle 212 Where the shareholders' meeting makes a resolution on the distribution of profits, the board of directors shall make the resolution on the date on which the shareholders' meeting makes the resolutionDistributions are made within six months
6. Capital reserve can make up for lossesArticle 214.2 The provident fund shall be used to make up for the company's losses, and the arbitrary provident fund and the statutory reserve fund shall be used first; Still can't make up for it,The capital reserve can be used in accordance with the regulations
Make a point! For the first time, it was clarified that the capital reserve could be used to cover losses, but it should be after the order in which the surplus reserve covered the losses。Note that the loss recovery here is an accounting concept, not a corporate income tax concept.
7. The right to decide on the employment and dismissal of accounting firmsArticle 215 The employment or dismissal of an accounting firm that undertakes the company's audit business shall, in accordance with the provisions of the articles of association, be appointed by the shareholders' meeting, the board of directors orBoard of SupervisorsDecision.
Make a point! Article 169 of the original Company Law stipulates that only the shareholders' meeting and the board of directors can decide on the employment and dismissal of an accounting firmThe New Company Law gives the same powers to the Board of Supervisors.