Income Tax Handling Techniques For Acquiring Equity In Enterprises

Finance and tax [2009]59 stipulates that the acquisition of shares refers to a company (hereinafter referred to as a takeover enterprise) to buy shares of another enterprise (hereinafter referred to as the acquired enterprise) to achieve the paction controlled by the acquired enterprise.

That is to say, it belongs to the merger control in the application guide of Enterprise Accounting Standards No. twentieth - enterprise merger.

The acquisition of shares is a paction controlled by the acquired enterprises, that is, acquiring the equity of the invested units to form investment in the subsidiary company; if the acquisition of equity is formed, the investment in the joint venture and the investment in the joint venture will not be a share purchase.

1. General tax treatment for stock acquisition

Financial and tax [2009]59 stipulates that the purchase of shares in the enterprise shall be dealt with according to the following provisions:

1. the acquirer shall confirm the proceeds or losses of equity, assets pfer.

2. the tax base for acquiring equity or assets should be determined on the basis of fair value.

3. the relevant income tax matters of the acquired enterprises remain unchanged in principle.

In fact, the acquirer will sell an asset and sell the profits and losses into the current taxable income. The acquirer is based on the purchase of an asset, the asset is calculated on the basis of the purchase price (fair value); the long-term equity investment is a paction between shareholders, which is not related to the acquired enterprise, and the related income tax matters of the acquired enterprise are naturally unchanged.

The general tax treatment of equity acquisition is very simple, and it is no different from other asset sales.

Two, special tax treatment of equity purchase

1. special restructuring conditions

(1) having a reasonable commercial purpose and not reducing, exempting or postponing paying taxes.

(two) acquisition of shares and acquisition of enterprises shall not be less than 75% of the total shares of the acquired enterprises.

(three) the original substantive business activities of the restructured assets will not be changed within 12 consecutive months after the reorganization.

(four) the amount of equity payments acquired by the acquiring company at the time of the acquisition of the equity purchase is not less than 85% of the total amount of the paction paid.

(five) the original major shareholder who has acquired equity payments in the reorganization of enterprises shall not pfer the shares acquired within 12 months after the reorganization.

The second provision of fiscal and taxation [2009]59 stipulates that the equity payment in this Notice refers to the payment in the consideration of the party who purchased or exchanged assets in the reorganization of enterprises, in the form of payment of shares and shares of the enterprise or its holding enterprises.

There are two kinds of equity payment:

(1) payment by equity of this enterprise is private placement.

(two) pay the share rights of the holding company.

What we should pay attention to are:

(1) the sixth provision of the "enterprise restructuring business enterprise income tax administration" stipulates that the holding enterprises mentioned in article second of the notice refer to enterprises directly holding shares by the enterprises.

That is, the replacement of the equity of a subsidiary, rather than the equity of the parent company.

(two) the original main shareholder stipulated in article fifth (five) of the twentieth regulation of enterprise restructuring business enterprise income tax refers to the shareholder who originally owns more than 20% of the pferred enterprise or the acquired enterprise.

2. special reorganization

Handle

The parties to the equity purchase deal may choose to deal with the following provisions:

1. the shareholders of the acquired company get the tax base for acquiring the shares of the enterprise, and determine the original tax base of the acquired shares.

2. the tax basis for acquiring the shares of the acquired company is determined by the original tax base of the acquired shares.

3. the tax base and other related income tax items of the original assets and liabilities of the acquired enterprises and the acquired enterprises remain unchanged.

4. if the restructured paction parties fail to confirm the pfer or loss of the assets concerned in accordance with the provisions of Article 1 (1) to (five), the non equity payment shall still confirm the corresponding assets pfer income or loss in the current paction, and adjust the tax base of the corresponding assets.

The income or loss of assets pfer corresponding to non equity payment = = the fair value of the pferred assets - the tax base of the pferred assets) * (non equity payment amount, the fair value of the pferred assets).

(1) with the equity payment of the enterprise, the case of private placement

Case 1: a company purchases 80% shares of A company owned by another company B by issuing shares and a fixed asset.

To acquire this share, a company has issued 20 million shares of common stock with a face value of 1 yuan per share and a fair value of 5 yuan per share.

The original price of a fixed asset is 10 million yuan, the accumulated depreciation is 5 million yuan, and the fair value is 8 million yuan.

When obtaining the equity, A company's net assets book value is 90 million yuan, and its fair value is 10800/80% million yuan.

The 80% equity interest of A owned by the company B is 60 million yuan.

Shareholders of the acquired company B company

The ratio of equity payment to the total amount of paction payment = (2000 * 5) 10800=92.59%

Assume that other conditions concurrently meet special recombination conditions.

A / B company chooses special reorganization

Shareholders of the acquired company B company

1. Shareholders of the acquired company shall confirm the amount of taxable income:

(10800-6000) x (800 * 10800) =355.68

2. Company B obtains the shares of a company.

6000 x 92.59%=5555.4

Takeover company a

1, the pfer of fixed assets recognizes taxable income 800- (1000-500) =300

2. The tax basis for a company to acquire A shares.

6000 x 92.59%+10800 * 7.41%=6355.68

For B companies, compared with general restructuring, the amount of taxable income (10800-6000) -355.68=4444.32 was recognised less than that of the general reorganization period, while the tax base of the company's shares was reduced by 10000-5555.4=4444.6 (4444.6 and 4444.32 respectively because of the decimal four house five entry), which is a deductible temporary difference.

However, for a company, the tax base of a company's equity stake in A has also been reduced by 4444.32.

There are more taxes than special reorganization and general reorganization.

(two) with its holding enterprises

case

Case 2: take the case 1, replace the company's shares with the private placement of shares with the shares held by the company's B company's 20 million common shares and the fair value of 5 yuan per share to the company B, a company holding B company 20 million shares tax base is 80 million yuan, other conditions remain unchanged.

A / B company chooses special reorganization

The shareholders' income tax of the acquired company is 1 identical with that of the case.

The tax basis for acquiring the shares of A company is determined by the original tax base of the acquired shares, which is 6000 * 92.59%+10800 * 7.41%=6355.68 (of which the profit and loss portion is 10800 * 7.41%).

A company's original B2000 million shares tax base is 80 million yuan, the choice of special restructuring tax base reduced by 8000-5555.4=2444.6, the tax base has changed. If a company originally held B company 20 million shares tax base is 50 million yuan, choose special reorganization after tax base will increase 5555.4-5000=555.4.

The special reorganization should be chosen according to the equity payment of the holding enterprise. If the "acquisition enterprise obtains the tax base of the acquired enterprise's equity, it is determined by the original tax base of the buyout enterprise to pay the share interest".

It seems more appropriate.