How To Correctly Calculate The Deduction Limit For Entertainment Expenses

Many enterprises often deal with the calculation of the pre tax deduction limit of business entertainment in the simplest way. For example, if the sales revenue of accounting statements is multiplied by 5 per thousand, compared with the 60% of the business entertainment expenses, the small person will be taken as the pre tax deduction limit, which not only exposes the relevant enterprises that do not understand and grasp the relevant provisions of the tax law, but also makes the enterprises unable to make full use of the tax policy.

For this reason, the author analyzes the problem of how to correctly determine the base of the business tax deduction before entertainment.

Under normal circumstances, the size of sales revenue often determines whether the business entertainment fee can be deducted before tax. The higher the income is, the more likely the business can be deducted before tax.

However, the sales revenue as a base for calculating business entertainment expenses is often not only reflected in the sales statements of the accounting statements, but also has to go through the necessary adjustment, and the adjustment results often exceed the income reflected in the accounting statements. There are three common situations that need to be adjusted.

First, according to the regulations of the State Administration of Taxation on the handling of certain tax issues in the implementation of enterprise income tax (National Tax Letter No. 2009] No. 202, when calculating the expenses for deducting the expenses of business entertainment, advertising and business publicity, the sales (business) receipts shall include the amount of sales (business) income stipulated in the twenty-fifth regulations of the implementing regulations.

Two, according to the Circular of the State Administration of Taxation on Issuing the "enterprise income tax treatment method of real estate development and operation business" (No. 31 of the national tax [2009]), the receipts obtained by the enterprises through the formal signing of the real estate sales contract or the real estate pre-sale contract shall be recognized as the realization of sales revenue.

The three is the state.

The circular on the implementation of certain tax issues in the enterprise income tax law "(National Tax Letter No. 2010] No. 79) stipulates that dividends, dividends and pfer proceeds from the investment enterprises that are engaged in equity investment businesses (including group headquarters, venture capital enterprises, etc.) can be calculated according to the prescribed proportion of the business entertainment expenses deduction quota.

The above three situations should be regarded as the base of calculating the business entertainment expenses.

During the preparation period of enterprises

Although it is zero, the business entertainment fee can still be deducted.

According to the fifth provision of the State Administration of Taxation on the issue of tax treatment on the taxable income of enterprise income (the fifteenth announcement of the State Administration of Taxation 2012), the business entertainment expenses related to the preparatory activities during the preparation period of an enterprise can be included in the enterprise's preparation fee according to the actual amount of 60%, and it is deducted according to the relevant regulations before tax.

Therefore, during the period of preparation, the company is concerned with organizing activities.

It will not be affected by the level of sales revenue. Even if the sales revenue can not be obtained during the preparatory period, it can be directly charged to the enterprise's preparation fee according to 60% of the actual amount of the business entertainment fee, and it is deducted according to the regulations before tax.

Generally speaking, tax planning can be divided into three levels, namely, strategic structure, business mode and fiscal and taxation management.

From the perspective of the role of Financial Accountants in the company, tax planning can be more involved in the company's fiscal and tax management level. In order to raise the level of accounting, maximize the cost deduction, and actively assist the company in applying various preferential tax policies, the tax burden will be reduced while improving the standardization of tax administration and paying less tax.

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