What Is a Fixed Balance Transfer Rate?

The transfer of fixed assets refers to the change of property rights or the simultaneous change of property rights and physical installation locations of fixed assets caused by transfers, adjustments, investments, and sales within the company or within its holding subsidiaries.

Transfer of fixed assets

Right!

The transfer of fixed assets refers to the change of property rights or the simultaneous change of property rights and physical installation locations of fixed assets caused by transfers, adjustments, investments, and sales within the company or within its holding subsidiaries.

Fixed assets include movable and real assets. Fixed assets may be transferred outside the enterprise or internally. The internal transfer may be between the head office and branch office or between parent and subsidiary companies within the group company.

General treatment of transfer of fixed assets:

1. Land, houses and buildings, transportation equipment, machinery equipment, other equipment, etc.

Tax-related treatment of transfer of fixed assets:

In terms of turnover tax, if fixed assets are movable, it mainly involves value added tax. If fixed assets are real estate, they mainly involve business tax.

I. Value Added Tax

1. The Ministry of Finance and State Administration of Taxation's "Notice on Several Issues Concerning the Implementation of the Reform of Value-added Tax in the Whole Country" (Caishui [2008] No. 170) stipulates that as of January 1, 2009, taxpayers should sell their used fixed assets. VAT is levied according to different situations: (1) sales of fixed assets purchased or self-made after January 1, 2009, which are used by themselves, are levied at the applicable tax rate; (2) not included in the expansion before December 31, 2008 Taxpayers in the pilot range of VAT deductions who sell their fixed assets purchased or self-made before December 31, 2008 will be levied VAT at half the rate of 4%.

2. The Ministry of Finance and State Administration of Taxation's "Notice on the Applicable Low Value-added Tax Rate and Simple Method of Value-added Tax Policies for Certain Goods" (Caishui [2009] No. 9) stipulates that small-scale taxpayers (except for other individuals, the same below) Sales of used fixed assets are subject to a 2% levy on VAT.

3. The State Administration of Taxation's "Notice on Issues Concerning the Simple VAT Collection Policy" (Guo Shui Han [2009] No. 90) stipulates that, in accordance with Article 4 (3) of the Implementation Rules of the Provisional Regulations on Value Added Tax, there are two More than one institution and a taxpayer (unit or individual industrial and commercial household) with unified accounting will transfer the goods from one institution to other institutions for sale, as if the goods were sold, except that the relevant institutions are located in the same county (city).

Summarizing the above rules, it can be known that (1) the general taxpayer's fixed assets transfer is generally levied at a tax rate of 17% or reduced by half at a rate of 4%; small-scale taxpayers are reduced at a rate of 2%; (2) Independently-accounted transfers of fixed assets between parent and subsidiary companies in the group are treated as sales and paid VAT, and transfers of assets across counties and districts in the head office for sales should be treated as sales and paid VAT.

Business tax

Article 4 of the Implementation Rules of the Interim Regulations on Business Taxes stipulates that the provision of labor services, transfer of intangible assets, or sales of immovable property as referred to in Article 1 of the Interim Regulations on Business Taxes refers to the provision of labor services under the Regulations, the transfer of intangible assets or the payment of compensation under the regulations The transfer of real estate ownership. That is, the two key words for judging the occurrence of business tax liability are "paid" and "ownership". Paid refers to paid provision and paid transfer; ownership refers to the transfer of ownership of real property. The transfer of limited or permanent use of real property, and the unit's giving of real property to others for free are considered sales of real property. If the transfer of fixed assets involves the transfer of ownership, a 5% business tax shall be paid in accordance with the law.

Third, income tax

The State Administration of Taxation's Notice Concerning the Handling of Enterprise Income Taxes on Assets Disposal (Guo Shui Han [2008] No. 828) stipulates that the transfer of assets between the head office and its branches, in addition to transferring assets overseas, due to asset ownership There is no change in form and substance, and it can be used as an internal disposal of assets. It is not considered as revenue from sales. The tax basis of related assets is continuously calculated.

Accounting for transfer of fixed assets

According to the relevant provisions of the "Accounting Standards for Business Enterprises No. 4-Fixed Assets", the transfer of fixed assets includes sales, transfers, foreign investments, non-monetary asset exchanges, donations, debt repayments, and transfers, and is generally accounted for through the "fixed assets cleanup" account. That is, debit "fixed assets liquidation", "fixed assets impairment provision", "accumulated depreciation", credit "fixed assets", and then the balance of the "fixed assets liquidation" account, refer to "Accounting Standards for Business Enterprises No. 2- "Long-term equity investment", "Enterprise Accounting Standards No. 7-Non-Monetary Asset Exchange", "Enterprise Accounting Standards No. 12-Debt Restructuring", etc., are transferred to relevant subjects in accordance with "fair value", which may result in Differences between accounting and tax laws shall be accounted for in accordance with the Accounting Standards for Business Enterprises No. 18-Income Tax.