Zhaotong company registration: How to deal with individual tax when natural person shareholders bear claims and debts when transferring equity?

Applicable personal income tax policies

The "Reply of the State Administration of Taxation on the Collection of Personal Income Tax on Equity Transfer Income" (Guo Shui Han [2007] No. 244) stipulates that all the original shareholders of a hot spring company , by signing an equity transfer agreement, the equity is transferred to the new shareholder by transferring all the company's assets. The original shareholders will be responsible for the claims and debts before the time stipulated in the agreement, and the new shareholders will be responsible for the claims and debts after the time stipulated in the agreement. According to the provisions of the "Personal Income Tax Law" and its implementation regulations, the original shareholder's income from equity transfer shall be levied personal income tax according to the "property transfer income" item.

Example Analysis

(1) Assuming Debt

Example 1: Company A is a one-person company, and investor Li contributed 10 million yuan. In August 2015, Li transferred all his equity to Wang for a total transfer price of 30 million yuan. However, the agreement also stipulates that Li must bear a debt of 8 million yuan from Company A (payable to Company A). At the time of equity transfer, the tax calculation cost of the equity held by Li is still 10 million yuan, assuming that the relevant taxes and fees in the equity transfer process are not considered.

As for Li’s equity transfer income, the author believes that the tax should be based on the individual’s actual income. Li’s actual income after repaying the company’s liabilities should be 12 million yuan (2000-800), and the personal income tax payable 2.4 million yuan (1200×20%). Li's assumption of Company A's debts will lead to an increase in Company A's net assets, which can be regarded as an additional investment in Company A. The accounting treatment is as follows: (Unit: 10,000 yuan, the same below)

Debit: payable Account - Company A 800

Loan: Paid-in capital - Li 800

The taxable cost of Li’s equity in Company A should be the initial investment cost and additional investment The total cost is 18 million yuan (100800), and the income from the equity transfer should be 12 million yuan (3000-1800). It should be noted that Li's assumption of Company A's designated debt is an integral part of the equity transfer transaction. His behavior is paid and cannot be regarded as a free donation to Company A. The above accounting treatment can avoid the risk of overpaying corporate income tax due to accepting donations.

In addition, if Li does not bear a liability of 8 million yuan, the fair value of holding company A's equity should be 22 million yuan (3000-800), and Wang only needs to pay 22 million yuan to obtain A All shares of the company. Therefore, this example can also be converted into the following transaction: Wang first lends 8 million yuan to Company A to repay Company A's debt, and then uses 22 million yuan to purchase equity. Company A's accounting is handled as follows:

Debit: bank deposit 800

Credit: other payables - Wang 800

Debit: accounts payable - Company A's loan of 800

Bank deposit 800

Li's equity transfer income is still 12 million yuan (2200-1000). The taxable cost for Wang to obtain the equity of Company A was 22 million yuan (the other 8 million yuan formed a debt receivable).

(2) Assuming claims

Example 2: Continuing from the above example, the equity transfer agreement also stipulates that Li can obtain a claim of 8 million yuan from Company A (receivable from Company B) , other conditions remain unchanged. The author believes that the creditor's rights to Company A obtained by Li can be regarded as profit distribution by Company A to Li, or Li's recovery of part of his investment. The accounting treatment is as follows:

1. Profit distribution

Debit: profit distribution 800

Credit: dividend payable - Li 800

Debit: Dividends payable - Li 800

Credit: Accounts receivable - Company B 800

Li’s actual income from the transfer of equity was 20 million yuan (3000 -1000), the personal income tax payable is 4 million yuan (2000×20%). Li received a dividend of 8 million yuan and paid personal income tax of 1.6 million yuan (800×20%). The total personal income tax payable by Li is 5.6 million yuan (40160).

2. Recovery of investment

Debit: paid-in capital (capital reserve, surplus reserve, etc.) 800

Credit: accounts receivable - B Company 800

The taxable cost of Li’s equity in Company A should be 2 million yuan (1000-800), the income from the equity transfer is 28 million yuan (3000-200), and the personal income tax payable is 5.6 million yuan Yuan (2800×20%). The personal income tax payable is the same as the first accounting treatment.

Notes

According to the provisions of Guo Shui Han [2007] No. 244, if the transfer of equity involves the transferor assuming claims and debts, the taxable income for personal income tax = (the total equity transfer of the original shareholder Income - total debts borne by the original shareholders + total claims recovered by the original shareholders - registered capital amount - relevant taxes and fees during the equity transfer process) × shareholding ratio of the original shareholders (hereinafter referred to as formula 1); or personal income taxable income = Income from equity transfer distributed by the original shareholder + Income from the collection of the company's debt by the original shareholder - Expenditures for the company's debt borne by the original shareholder - Cost of investment by the original shareholder in the company (hereinafter referred to as Formula 2). Two points need to be noted when applying the above calculation formula:

First, the claims and debts in the formula should be measured at fair value (rather than book value). In practice, the competent tax authorities should examine whether the transferor has assumed fictitious debts (debts that do not actually exist, or the actual amount of debts to be borne is less than the book amount), or acquired implicit claims (obtained claims that are not reflected in the books, or acquired claims) (the fair value is greater than the carrying amount) to avoid paying personal income tax.

Secondly, the expression of formula 1 is not rigorous enough and should be changed to "Personal income taxable income = (total income from equity transfer of original shareholders - total debts borne by original shareholders + total claims recovered by original shareholders - Relevant taxes and fees during the equity transfer process) × the shareholder’s shareholding ratio – the tax calculation cost of the shareholder’s investment.” The taxable cost of shareholder investment is equal to the sum of the fair values ??of the investment assets when the initial investment and additional investment are made (the taxable cost of shareholder investment is not necessarily equal to the amount included in the "registered capital"). In Formula 2, "the original shareholder's investment cost in the company" should also be changed to "the original shareholder's taxable cost of investing in the company."