Circular of the State Administration of Taxation on Printing and Distributing the Interim Provisions on Several Issues concerning Income Tax Operation in Enterprise Reorganization and Restructuring
Circular of the State Administration of Taxation on Printing and Distributing the Interim Provisions on Several Issues concerning Income Tax Operation in Enterprise Reorganization and Restructuring
Circular of the State Administration of Taxation on Printing and Distributing the Interim Provisions on Several Issues concerning Income Tax Operation in Enterprise Reorganization and Restructuring
Guo Shui Fa [1998] No. 97
June 24, 1998
The State Administration of Taxation and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated under the state plan,
In order to meet the requirements of reorganization and reconstruction of the enterprises, enhance the income tax collection and administration of reorganized and reconstructed enterprises, it is hereby issued, the Provisions on Several Issues Concerning Income Tax Operation in Enterprise Reorganization and Restructuring promulgated by the State Administration of Taxation, to be implemented and adhered to. Please promptly report to the Administration, in case of any questions or suggestions during the implementation.
Appendix:
Provisions on Several Issues Concerning Income Tax Operation in Enterprise Reorganization and Restructuring
With the purpose of meeting the requirements of reorganization and reconstruction of enterprises merging, acquisition, split-up, reorganization of stock rights and assets transfer, in accordance with the Interim Regulations of the People's Republic of China on Enterprise Income Tax (hereinafter refer to as Regulations)and its implementation details, it is now clarified, the matters of conformation of income taxpayers, assets pricing, tax preference and deficit coverage related to enterprise reorganization and remanufacture:
I. Taxation matters in enterprise merging and acquisition
Merging refers to legal act that two or more enterprises combine into one enterprise in accordance with the regulations of the law or contract. Merging can be done in two forms which are merger by consolidation and merger by incorporation. Merger by consolidation refers to when more than two enterprises merge, and one of the enterprises survives by absorbing other enterprises (this kind of enterprises hereinafter refer to as "surviving enterprise"), where the absorbed enterprises will be dismissed. Merger by incorporation refers to more than two enterprises merging into one new enterprise, and each party of the merging being dismissed. Acquisition refers to an act where one enterprise purchases the property rights of the other enterprises, which cause the other enterprises to lose their capacity of corporation or changing of legal entity. Merging and acquisition don't need to go through the procedures of liquidation. When the enterprises merging or acquisition do so, the creditor's rights and debt of the party of merging or acquisition will be succeeded by the enterprise after merging or acquisition or the new established enterprise.
The taxation matters shall be handled in accordance with the following provisions after the enterprises' merging or acquisition according to the law:
1. Management of taxpayer
(1) Enterprise that is absorbed or acquired and surviving enterprises which are in line with the conditions of taxpayer and in accordance with the Regulations and its implementation details shall be taxpayers, as the absorbed or acquired enterprise and surviving enterprise; the absorbed or acquired enterprises which are not in line with the conditions of taxpayer shall be taxpayers as surviving enterprise, who will also succeed the undone taxation of the absorbed or acquired enterprises.
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