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What points should be paid attention to before tax deduction of business entertainment expenses?One article to sort out

2021-03-10

Business entertainment expenses

Pre tax deduction

What are the key points to pay attention to?

The reasonable entertainment expenses paid by an enterprise in production and business operation may be deducted before tax as business entertainment expenses within the deduction limit stipulated in the enterprise income tax law.So in the pre tax deduction of business entertainment expenses, what are the specific precautions? Let's have a look at it together!

1、 Policy provisions

According to Article 43 of the regulations for the implementation of the enterprise income tax law of the people's Republic of China (Order No. 512 of the State Council of the people's Republic of China), the entertainment expenses related to production and operation activities of an enterprise shall be deducted according to 60% of the amount incurred, but the maximum amount shall not exceed 5 ‰ of the sales (business) income of the current yearBusiness entertainment expenses are deducted and adopted "Double quota" and "the smaller principle" 。The calculation base for the deduction limit of advertising expenses, business publicity expenses and business entertainment expenses is the total sales (operating) revenue = main business income + other business income + deemed sales income, but does not include non business income such as government subsidy income.

2、 Case study

In 2020, the sales revenue of a domestic resident enterprise is 10 million yuan, and the actual amount of business entertainment expenses is 60000 yuan. How much pre tax deduction is allowed? If the actual amount of business entertainment is 40000 yuan, what is the pre tax deduction allowed? If the actual amount of business entertainment is 100000 yuan, what is the pre tax deduction allowed?

01

The actual amount incurred shall not exceed the current year

5 ‰ of sales (operating) revenue

The sales revenue is 10 million yuan, and the actual amount of business entertainment expenses is 40000 yuan, which is deducted according to 60% of the amount incurred. The pre tax deduction amount is 4 * 60% = 24000 yuan.

02

The actual amount incurred exceeds that of the current year

5 ‰ of sales (operating) revenue

1. 60% of the actual amount incurred less than The 5 ‰ sales revenue of the current year is 10 million yuan, and the actual amount of business entertainment expenses is 60000 yuan, which is more than 5 ‰ of the current year's sales (business) income, i.e., 50000 yuan. However, according to 60% of the actual amount, the actual pre tax deduction amount is 36000 yuan, which is within the limit. Therefore, the enterprise can deduct 36000 yuan before tax in the current year.2. 60% of the actual amount incurred greater than 5 ‰ of the sales (operating) revenue of the current year is 10 million yuan, and the actual amount of business entertainment expenses is 100000 yuan. According to 60% of the actual amount, the pre tax deduction amount is 60000 yuan. However, since the maximum amount can not exceed 5 ‰ of the sales (business) revenue of the current year, and 5 ‰ of the sales revenue of 10 million yuan is 50000 yuan, under such circumstances, the enterprise can only deduct 50000 yuan before tax in the current yearThe part over 50000 yuan shall not be deducted before tax.

3、 Key points

01

Business entertainment expenses not actually incurred

No pre tax deduction is allowed.

In 2020, company a has withdrawn 5 million yuan of business entertainment expenses according to 0.5% of the sales revenue. However, if the actual business entertainment expenses of company a are only 4.5 million yuan, there is no actual business entertainment expenses of 500000 yuan, which can not be deducted before tax. The 500000 yuan should be fully increased and not involved in the deduction of the limit.

02

Pay attention to business entertainment expenses

The base of the pre tax deduction.

According to the notice of the State Administration of Taxation on some tax treatment issues in the implementation of enterprise income tax (GSH [2009] No. 202), when calculating the deduction limit of business entertainment expenses, advertising expenses and business publicity expenses, the sales (business) income of an enterprise shall include the deemed sales (business) income specified in Article 25 of the implementation regulationsTherefore, the pre tax deduction calculation base of business entertainment expenses includes main business income, other business income and deemed sales income.In addition, according to the notice of the State Administration of Taxation on several tax issues concerning the implementation of the enterprise income tax law (GSH [2010] No. 79), "for enterprises engaged in equity investment business (including headquarters of group companies, venture capital enterprises, etc.), the dividends, dividends and equity transfer income distributed from the invested enterprises can be calculated according to the prescribed proportionEntertainment expenses deduction limit. "

03

Special regulations during the preparation period.

Article 5 of the announcement of the State Administration of Taxation on several tax treatment issues of taxable income of enterprise income tax (Announcement No. 15, 2012) of the State Administration of Taxation stipulates that "during the establishment (preparation) period of an enterprise, the business entertainment expenses related to the preparation activities may be included in the enterprise preparation expenses according to 60% of the actual amount, and deducted before tax according to the relevant provisions." 

4、 Declaration form

The pre tax deduction limit of business entertainment expenses only needs to adjust the taxable income in accordance with the tax law and the differences between tax and society during the annual remittance and declaration of enterprise income tax, and there is no need to adjust the tax when reporting quarterly prepayment of enterprise income tax. The specific annual return forms are "business entertainment expenses" in line 4 of a104000 "detailed statement of period expenses" and "details of tax adjustment items" of a105000Line 15 "business entertainment expenses":


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