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Good Luck Co (GLC) is a wholly-owned foreign enterprise engaged in the manufacture and sale of home appliances
in Tianjin. To cope with rapid business growth, GLC has set up two branches in January 2009, B1 in Shanghai and B2 in Chengdu. GLC’s taxable income and other relevant information for enterprise income tax (EIT) purposes for the first quarter of 2009 is as follows: Head office B1 B2 Total RMB RMB RMB RMB Taxable income 1,500,000 1,000,000 500,000 3,000,000 Gross revenue 5,300,000 3,500,000 1,750,000 10,550,000 Salary cost 1,900,000 1,000,000 600,000 3,500,000 Asset value 7,800,000 5,000,000 4,500,000 17,300,000 The management of GLC understands that there is a new tax filing system for a head office and branches across different provinces under the new EIT regime and has approached you for advice. Required: (a) Explain the principle of ‘combined calculation, respective supervision, provisional local payment, centralised annual settlement and tax revenue transfer’ applicable to the calculation and collection of EIT payable where a resident enterprise files its EIT return on a combined basis for its head office and branches. (5 marks) (b) Explain how the EIT payable by Good Luck Co should be calculated and settled by its head office and branches, supporting your explanation with a calculation of the EIT payable at the provisional filing stage for the first quarter of 2009. (10 marks) (c) Discuss the impact of the new EIT filing system on foreign investment enterprises and on domestic |
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