How to Understand the pre-tax deduction rules for business entertainment expenses

According to the Enterprise Income Tax Law of the People's Republic of China, enterprise income tax reporting and settlement should be completed by the enterprise by the end of May of the following year, during tax guidance and tax inspection on settlement and settlement work, the tax authorities did not accurately define business entertainment fees in the financial accounting system and enterprise income tax law, this has caused some confusion to our grass-roots tax officers in tax law enforcement practices. I am tutoring enterprises in the annual declaration of corporate income tax and the information I learned during the subsequent inspection, I would like to talk about my views on the pre-tax Deduction of business entertainment expenses. I. concept and scope of business entertainment expenses the so-called business entertainment expenses refer to the compensation expenses incurred by enterprises for the reasonable needs of production and business operations, it is a necessary and tangible expense incurred and paid during the production and operation of an enterprise. In general, payment is defined as expenses incurred by catering, liquor, cigarettes, and other entertainment foods and normal entertainment activities. The specific scope is: (1) Expenses for banquets or work meals due to enterprise production and operation needs; (2) Expenses for souvenirs presented due to enterprise production and operation needs; (3) Travel expenses for tourist sites, transportation and other expenses incurred as a result of enterprises' production and operation needs; (4) Travel expenses for business-related personnel arising as a result of enterprises' production and operation needs. Ii. Definition of business entertainment and business promotion, conference, meal, and non-normal kickbacks business entertainment fees are paid by the external reception business units and individuals of the unit, its consumption subject is the personnel of an external organization, rather than the employees of this Organization, and its purpose is to maintain good external public relations. It is generally believed that the expenses for business entertainment must be normal and necessary. At the same time, it is directly related to business activities and there must be sufficient valid creden. Business Promotion fee refers to the expenses paid by an enterprise to carry out business promotion activities. It mainly refers to advertising expenses that fail to be spread through the media, including gifts and souvenirs issued by the enterprise with the enterprise logo. Generally, purchased gifts are used for gift purposes and should be used for entertainment expenses. However, if a gift is produced or commissioned by the company, it is printed with a special identifier of the company, it can serve as an advertisement and publicity for the company's image and products, and can be used as a business promotion fee. The conference fee is the expenses incurred by the Organization for holding the meeting, including the rental of external venues and related accommodation expenses. For future checks and inspection by law enforcement authorities, the attachment of the accounting credential should include: meeting documents, meeting time and place, agenda arrangement, attendees, cost standards, and related check-in forms; otherwise, they shall be considered as business entertainment expenses. Meals by mistake means that the employees of the unit cannot go back to the canteen for meals due to work reasons, and the meal preparation fee for meals outside the unit needs to be reimbursed, that is, the diners are the employees of the unit, if you fail to return to the canteen for meals for objective reasons, if you are not an employee of the unit, you should generally be treated as a business entertainment fee. For expenses incurred due to some illegal operations, although these expenditures seem closely related to production and operation activities, they are not reasonable and necessary expenses, and some are even illegal, for example, the benefits, kickbacks, bribes, and other expenses provided to the customer in the hidden box operation cannot be included in the Service entertainment expenses, and should be directly used as a tax adjustment project in the tax law. Iii. Audit of business entertainment expenses according to the relevant provisions of the enterprise income tax law, the basic requirements for pre-tax Deduction of business entertainment expenses are: in the accounting of business entertainment expenses, it is necessary to collect according to the second-level subjects stipulated by management fees. If the collection is not based on the relevant provisions and the expenses of the business entertainment expenses are hidden in other subjects, tax deduction is not allowed. In actual work, we often find the following situations: (1) Tobacco, wine, food, and gifts for reception purchased by the Organization Separately. Because of the receipt of the retail invoice for goods issued, it directly enters the business expenses or other management expenses, but is not collected to the business entertainment expenses; (2) the business reception expenses such as the canteen reception customers of the Unit are directly included in the employee welfare expenses; (3) the business entertainment expenses are squeezed into the conference fee, and the business entertainment expenses are mixed into the business publicity fee. In the case of counseling, enterprises should be urged to make up their own reports and correct reconciliation. At the same time, it is important to review the arrears of business entertainment expenses: (1) whether the expenditure for each business entertainment fee provides valid creden; or materials to prove its authenticity, and whether the bill is legal; (2) check whether it is related to the production and operation of the enterprise and whether it actually occurs; (3) whether the calculation based on the income limit is accurate: the calculation base for the deduction of business entertainment expenses needs to be determined, according to the Tax Law, the deduction calculation base is the sales (business) income of the first row of the main table of the enterprise income tax return form. The specific content is as follows: ① main business income, ② Other business income; ③ sales revenue. It is worth noting that, according to the provisions of the tax authority, the sales revenue is the number of taxpayers reported, rather than the number confirmed by the tax authority after inspection, the tax adjustment (appendix 3) should be filled in, and cannot be used as the base for business entertainment fee deduction calculation.