Navigating the 2023 CIT Reconciliation Season in China
With the 2023 tax year in the rearview, companies operating in China are entering the corporate income tax (CIT) reconciliation period. Local tax authorities have been proactive, issuing annual guides to assist businesses with their tax obligations. The deadline for final CIT settlement is set for May 31, 2024, and applies to all resident CIT taxpayers engaged in production and operation within the country.
Given the complexity of filing CIT reconciliation, which includes form submissions, annual accounting reports, and collection of tax vouchers for preferential treatment, companies are urged to start the process without delay. This ensures ample time to reconcile final tax payments before the looming deadline.
For general enterprises, the final settlement of payable and refundable CIT for the year 2023 must be completed by May 31, 2024. Companies ceasing operations are required to settle within 60 days from their termination date. The settlement process involves determining the tax payable or refundable based on monthly or quarterly prepayments.
China’s tax authorities suggest that small and medium-sized enterprises (SMEs) aim to complete their declarations in March and April. Listed companies are advised to do so before May 10, allowing sufficient time for subsequent payment.
CIT reconciliation can be conducted online through electronic tax bureau platforms or in person at local tax offices. A range of documents is required for the CIT declaration, including the Annual Tax Return for Enterprise Income Tax and annual financial accounting reports. Additional materials may be necessary depending on specific circumstances such as special reorganizations or overseas investment proportions.
There are several CIT incentives available, such as additional pre-tax deductions for research and development (R&D) expenses and reduced CIT rates in certain development zones. These incentives are designed to ease the tax burden on qualifying companies and encourage investment in key industries.
Moreover, pre-tax deduction vouchers play a pivotal role in CIT reconciliation. Companies must obtain compliant vouchers before the end of the final settlement period to make pre-tax deductions. Managing book-tax differences is also crucial for financial managers and auditors during this period.
After filing, it is important for businesses to retain all relevant documents for compliance purposes. This includes supporting documents for tax incentives and documentation related to asset loss deductions.
Disclaimer: The information provided is for general purposes only and may not account for local variations. No liability is assumed for the completeness or accuracy of the information.
For more detailed insights on doing business in China, including regulatory updates and expert guidance, visit www.dezshira.com.
