Taxation assignment VI

Submitted by; Noah Issa Philip Benjamin

Student ID: 15220171155809
College; WISE-SOE/ international Trade
Submission date 5th june 2018
 1. why did Chinese government reform enterprise income tax system?
There are four main reasons as to why china has reformed its enterprise income tax
system;
a. Because china has joined world Trade organization therefore, she has to follow
the WTO principles of national treatment and transparency by creating fair
environment for competition to enterprises.
b. The other reason is china wanted to update its income tax policy to reflect rapid
changes in china’s economy.
c. The reformation of the tax system was essential to enhance Chinese economic
growth and development.
d. The reform was necessary because it eliminates current preferential policies in
respect to the separated Chinese tax code and behaviors.

2. show the difference between the resident enterprises and non-resident

enterprises.
 The resident enterprise are the enterprises that are set up by law in the
territory of china. It is also set up by foreign laws but with the effective
management situated in the territory of china.
 While non-resident enterprise are those enterprises that has no place in china
but their sources of income is from china. It is the enterprise that is established
by the foreigners and works with the foreign law outside china but with
establishment from china.

3. which should be included in taxable income? Why?

a) interest income of national bond.
 Interest income of national bond shall not be considered as taxable
income, but in order terms it is also taxable income because the tax is
imposed on the interest paid.
b) fiscal appropriation.
 This should not be included in the taxable income because it is treated as non-
taxable income.
c) sponsorship expenditure
 This is non-taxable income which is not subjected to be deductible
d) income from donations
 incomes from donations are taxable because they are treated as expenditures
e) income from sell medicine prohibited by the government.
 This subjected to be taxable
4. How much income tax should it pay?
year 2008 2009 2010 2011 2012 2013 2014

Taxable -100 20 30 -80 30 10 90

income
0 -80 -50 -50 -20 -10
Income tax 0 0 0 0 0 0 90-80=10
10x0.25=2.5
In 2011 there was a loss of (-80) therefore it can be carried forward
 5. L.E is a Chinese company, but he has some business abroad and get income in 2009
which is list below:
How much enterprise income tax should he pay to Chinese government?
Country Country B Country A China

Taxable 80 200 1,000

income
Tax rate 18% 30% 25%

Total taxable income

= (80+200+1,000) *25%
= 320 CNY.

Tax credit
= (80*18%)+(200*25%)
= 14.4 + 50
= 64.4 CNY.

Total income tax

= 320 – 64.4
= 255.6 CNY

6. In 2010, the income of L.E is list as below.

How much enterprise income tax should he pay to Chinese government?
Country Country B Country A china
Taxable 80 150 1,000
income

Tax rate 30% 20% 25%

Total taxable income

= (80+150+1,000) *25%
= 307.5 CNY.

Tax credit
= (80*25%)+(150*20%)
= 20 + 30 = 50 CNY.

Carry forward tax credit

= 200*5%
= 10 CNY.

The income tax for Chinese government

= 307.5 – 50 – 10
= 247.5 CNY