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In the daily production and operation of enterprises, in order to promote new products and improve the visibility of enterprises, taxpayers usually have large advertising and business publicity expenses. According to Article 44 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China, "the expenses of qualified advertising and business publicity expenses of an enterprise, unless otherwise stipulated by the competent department of finance and taxation under the State Council, shall not exceed 15% of the sales (business) income in the current year and shall be allowed to be deducted; "Recently, the small editor received the taxpayer for advertising and business publicity expenses related to the consultation, what are the problems?" Let's have a look.

Taxpayer consultation question one

"Also as a period fee, why do advertising and business promotional expenses exceed the required deductions for some of the tax laws that allow for a pass-through deduction in a future tax year?"

Answer:

According to Article 44 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China:

"Advertising spending may need to be increased due to the large amount or relative amount of advertising costs that may occur in the enterprise, especially in the early stages of a business' creation, or in the early stages of new product development and a decline in product market share." However, after the market share is relatively stable, advertising expenses as a proportion of sales (business) revenue will be relatively fixed or even a downward trend. Long-term advertising may bring brand effect to enterprises, and even form well-known trademarks. Such a brand, trademark or even goodwill would benefit the business for life, not just one or more operating years. Therefore, the large amount of advertising expenditure that an enterprise has in certain tax years is capital expenditure, which should not be deducted directly in the tax year in which it occurs, but should be amortized in a balanced amount during the benefit period. The implementing regulations stipulate that the deductible advertising expenses of an enterprise in each tax year shall be limited to 15% of the sales (business) income, but more than the portion may be carryed forward indefinitely to the future tax year, which is in fact the embodiment of the spirit of this policy. "

Taxpayer consultation question two

"The tax code provides that advertising fees that exceed the deduction limit can be passed on indefinitely to future tax years, so how exactly?"

Answer:

Take your company as an example, if your company achieves sales revenue of 40 million yuan in 2018, advertising expenses of 5 million yuan in the current year, the previous year's closing without deducting advertising costs of 600,000 yuan. Your company applies the requirement that a portion of advertising expenses not exceeding 15% of the current year's sales revenue be deducted for the current year. Your company is allowed to deduct $5.6 million in advertising fees when calculating the amount of corporate income tax revenue for 2018. The calculation process is as follows:

2018 annual deduction limit of 4000 × 15% - 6 million yuan;

6 million yuan>5 million yuan, so the actual occurrence of 5 million this year can be fully deducted, in addition, can also be deducted from the previous year's undried advertising costs of 600,000, a total of 500, 60, 5.6 million yuan.

Taxpayer consultation question three

"In FY2018, our company has the same sales behavior, I would like to know, advertising and business promotional expenses sales revenue calculation base includes the same sales revenue?"

Answer:

In accordance with article 1 of the Notice of the State Administration of Taxation on Certain Tax Treatment Issues in the Implementation of Corporate Income Tax (State Tax Letter (2009) No. 202), "On the determination of the income base for sales (business)"

"When an enterprise calculates the limits for deducting expenses such as business entertainment, advertising and business publicity expenses, its sales (business) income shall include the amount of equivalent sales (business) income as stipulated in Article 25 of the Regulations."

Article 25 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China: Where an enterprise exchanges non-monetary assets and uses goods, property and services for donations, debt service, sponsorship, fund-raising, advertising, samples, employee benefits or profit distribution, it shall be treated as selling goods, transferring property or providing labor services, unless otherwise provided by the competent department of finance and taxation under the State Council.

Taxpayer consultation question four

"Are advertising and business promotional expenses deductible for all businesses at 15% of sales (operating) revenue?"

Answer:

According to Articles 1, 3 and 4 of the Notice of the State Administration of Taxation of the Ministry of Finance on the Policy of Pre-tax Deduction of Advertising and Business Propaganda Expenses (Finance and Taxation (2017) No. 41):

"As of January 1, 2016 to December 31, 2020, deductions will be granted for advertising and business promotional expenses of cosmetics manufacturing or sales, pharmaceutical manufacturing and beverage manufacturing (excluding liquor manufacturing) enterprises not exceeding 30% of sales (business) revenue for the current year;

Tobacco advertising and business promotion expenses of tobacco enterprises shall not be deducted from the calculation of taxable income. "

Taxpayer consultation question five

"I heard that affiliates can share advertising and business communications costs in accordance with the agreement, is there such a provision?"

Answer:

According to Article 2 of the Notice of the State Administration of Taxation of the Ministry of Finance on the Policy of Pre-tax Deduction of Advertising and Business Promotional Expenses (Finance and Taxation (2017) No. 41):

"For an affiliated enterprise that has entered into an advertising fee and business promotional fee allocation agreement (hereinafter referred to as an apportionment agreement), the advertising and business promotion expenses expenses of one party not exceeding the pre-tax deduction limit for sales (business) income for the current year may be deducted in the enterprise, or some or all of them may be collected and deducted by the other party in accordance with the apportionment agreement." The other party may, in calculating the pre-tax deduction limit for the enterprise's advertising expenses and business publicity expenses, collect the advertising expenses and business publicity expenses of the enterprise in accordance with the above-mentioned methods. "

Taxpayer consultation question six

"In order to promote our new products, on July 1, 2017, our company signed an advertising contract with an advertising company, which stipulates that the advertising company shall broadcast our product promotional film at a fixed time period from July 1, 2017 to June 30, 2018 at a designated location, and that our company shall pay the advertising fee and tax to the advertising company in full for a total of 254,400 yuan, and the other company shall issue a special invoice for value added tax to our company." On July 1, 2018, our company paid the advertising expenses in full, and the other party issued a special VAT invoice to our company, which amounted to 240,000 yuan and a tax amount of 144,000 yuan. As our company did not pay advertising fees to advertising companies in 2017 and therefore did not include the current year's expenses, this year our company can all 240,000 yuan of advertising expenses as a 2018 fee deduction? "

Answer:

According to Article 9 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China:

"The calculation of the amount of taxable income of an enterprise, on the basis of the system of recusal, is the income and expense of the current period, whether or not the amount is received or not, as income and expense of the current period; These Regulations and the competent departments of finance and taxation under the State Council shall provide otherwise. "

Therefore, your company's advertising expenses above cannot be fully deducted as 2018 expenses, and the respective expenses for 2017 and 2018 should be reasonably determined in accordance with the advertising release period agreed upon in the contract.

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