Technical analysis of whether real estate enterprises with book sales revenue of less than 1 million can be classified as "small and micro"
Gao Jifeng Tax Code 2022-04-09 2
summary:
The influence of the "small and micro" classification of real estate enterprises is huge, and tax enterprises are prone to major disputes.
In order to enjoy the one-time tax rebate preferential treatment in the Announcement of the Ministry of Finance and the State Administration of Taxation on Further Increasing the Implementation of the VAT Period-end Retention and Rebate Policy on March 21, 2022, real estate enterprises that implement the "pre-sale" system are determined to win the identity of "small and micro" enterprises because their book sales income is less than 1 million yuan. In 2011, the "operating income" in the real estate industry micro-enterprise classification standard is difficult to find in the document, which will inevitably lead to a huge controversy between tax enterprises about the statistical caliber of "operating income".
The tax bureau holds the power of the type, and if it is not careful, it will mistakenly approve the tax refund due to the wrong type, which will inevitably be an unbearable dereliction of duty and legal investigation. The strokes are swift, but the legal consequences are unbearable.
How to refer to the standards of "small and micro" of the statistical department for tax law enforcement, and how to correctly grasp the statistical caliber of "operating income" in the real estate industry, has become a top priority.
This paper attempts to explore how to make the correct choice for the "small and micro" classification of the real estate industry through the accounting treatment of pre-sale income, tax treatment, statistical departments actually grasping the caliber, and the indicators of the real estate industry, as well as how to combine the national conditions and legislative intentions.
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In March 2022, following the State Council's request to the tax department to continue to increase tax support for small and micro enterprises, the State Administration of Taxation has intensively introduced a series of deferral, exemption, tax reduction and tax refund policies to support small and micro enterprises and manufacturing industries. For small and micro enterprises, some of these policies use the usual corporate income tax caliber of taxation, and some use the statistical caliber of the type of enterprise division; some are the upgrading and continuation of the original policy, and some are innovation. However, no matter which policy, it is inseparable from the accurate confirmation of the identity of the beneficiary. Although, after the promulgation of the policy, both the tax system has continuously organized various meetings and lectures from top to bottom, and there have been various financial and tax service agencies that have almost bombarded and indiscriminately interpreted, but many propaganda and interpretations have only acted as "disseminators" of documents, and have not gone deep into the essence of the matter to conduct in-depth analysis and discussion, touching the core controversial issues that occur during actual implementation, and some are even dragonflies with water, the water is wet, and there is no opinion, and some are divorced from the legal system and legislative purposes to interpret the policy, so that they "carve a boat and seek a sword." The use of policies is not uncommon, and the policy of "taking things out of context" has not been effectively curbed. It is undeniable that since the statistical caliber of enterprise classification is still at the stage of social development more than 10 years ago, and the "phased tax preferential policies" are "immediately determined" according to the changes in today's political, social and economic environment, and have a strong "timeliness", then it is inevitable that disputes will arise with reference to some statistical calibers that have long been out of date, or even the original design is not necessarily perfect. It is precisely for this reason that not only are there endless debates in the theoretical and practical circles about the ambiguity of the policy, but also the tax departments in various places have different grasps of the policy, and even the same type of matter will be very different in tax treatment.
In order to more intuitively reveal such problems, after the announcement of the Ministry of Finance and the State Administration of Taxation on Further Increasing the Implementation of the Vat Retention and Rebate Policy at the End of the Period (Announcement No. 14 [2022] of the State Administration of Taxation of the Ministry of Finance and the State Administration of Taxation, hereinafter referred to as Announcement No. 14) issued by the real estate industry on March 21, 2022, how the tax authorities can refer to the enterprise classification type standards stipulated by the statistical department in 2011 is discussed in a superficial manner.
Article 1 of Announcement No. 14 stipulates: Increase the intensity of the vat refund policy for small and micro enterprises at the end of the vat period, expand the scope of the policy of fully refunding the VAT incremental tax credit for advanced manufacturing industries on a monthly basis to eligible small and micro enterprises (including individual industrial and commercial households, the same below), and refund the tax credit amount left by the stock of small and micro enterprises at one time. (1) Eligible small and micro enterprises may apply to the competent tax authority for a refund of the incremental tax credit from the tax filing period in April 2022. Before 31 December 2022, the tax refund conditions shall be implemented in accordance with Article 3 of this Announcement. (2) Eligible micro-enterprises may apply to the competent tax authority for a one-time refund of the amount of tax credit retained in the stock from the tax filing period in April 2022; Eligible small businesses can apply to the competent tax authority for a one-time refund of the existing tax credit from the May 2022 tax filing period.
At present, because it is difficult for the real estate industry to withdraw sales funds under the epidemic situation, and because the pre-sale income of real estate is based on the volume of 3% prepaid output VAT, which is smaller than the input VAT of 9% or 13% of construction expenditures, and the huge input VAT amount of this type of pressure cannot be deducted when pre-selling untapped income, it can only be deducted according to the Announcement of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs on Deepening the Relevant Policies of the VAT Reform (The Ministry of Finance and the State Administration of Taxation). Announcement No. 39 [2019] of the General Administration of Customs stipulates that the implementation of incremental tax rebates will inevitably lead to the formation of a huge amount of funds for the payment of VAT input tax in the pre-sale process. Therefore, real estate enterprises in the pre-sale stage will inevitably strive to enjoy the preferential policies of Article 1, Item 2 of Announcement No. 14. At present, the mainland real estate industry rarely has an "existing house" existing sales model, and most of them implement the "pre-sale" commercial housing model after obtaining the "commercial housing pre-sale certificate". From this, it can be said that basically all real estate companies in the pre-sale stage are willing to become the beneficiaries of this policy. It is precisely because of this that how to confirm whether the real estate company has the qualification of "small and micro" is particularly important.
Circular No. 14 confirms "small and micro" with reference to statistical caliber in Article 6. Its provisions: 6. The operating income indicators and total assets indicators referred to in this Announcement for medium-sized enterprises, small enterprises and micro-enterprises shall be determined in accordance with the operating income indicators and total assets indicators in the Provisions on the Standards for the Classification of Small and Medium-sized Enterprises (No. 300 [2011] of the Ministry of Industry and Information Technology) and the Provisions on the Standards for the Classification of Enterprises in the Financial Industry (Yinfa [2015] No. 309). Among them, the total assets indicator is determined according to the taxpayer's year-end value of the previous fiscal year. The operating income indicator is determined according to the VAT sales amount of the taxpayer in the previous fiscal year; If there is less than one fiscal year, it is calculated according to the following formula: VAT sales (year) = VAT sales during the actual existence of the enterprise in the previous fiscal year / The actual number of months of the enterprise×12. The sales volume of VAT referred to in this announcement includes sales of tax declarations, sales of audits and supplements, and sales of tax assessment adjustments. Where the VAT difference taxation policy applies, it shall be determined by the sales amount after the difference. In order to show the differences in policy effects caused by the identification of "small and micro" enterprises, the following is a comparison of two real estate companies of the same size in different provinces.
A large real estate group set up an A subsidiary in G Province, obtained land in 2016, began pre-sale in 2017, and achieved 1.7 billion yuan in pre-sale by the end of 2021, of which 700 million yuan in pre-sale revenue in 2021, sales income of 50 yuan, assets of 1.9 billion, 8 personnel. According to the 2011 Statistical Department's "Provisions on the Standards for the Classification of Small and Medium-sized Enterprises", the Taxation Bureau identified it as a "micro" enterprise, and handled a one-time VAT stock refund of 20 million yuan.
A large real estate group set up a B subsidiary in H Province, obtained land in 2016, began pre-sale in 2017, and achieved 1.8 billion yuan in pre-sale by the end of 2021, of which 800 million yuan in pre-sale in 2021, sales revenue of 1 million yuan, assets of 1.9 billion, 10 personnel, the company's value-added tax stock remained at the bottom of 24 million. Due to the large size of the matter, the tax authorities discussed according to the Provisions on standards for the classification of small and medium-sized enterprises and formed two opinions.
The first is that it should be implemented in accordance with the "Criteria for the Classification of Large, Medium, Small and Micro Enterprises in Statistics" in the Notice on Printing and Distributing the Measures for the Classification of Statistically Large, Medium, Small, and Micro Enterprises (2017) (Guo Tong Zi [2017] No. 213), and the former "Provisions on the Classification Standards for Small and Medium-sized Enterprises" of the Ministry of Industry and Information Technology [2011] No. 300 must be subject to the latest revision. Under this provision, an enterprise can be recognized as long as it has any of the criteria for the recognition of "micro" enterprises in terms of income or assets. The company only has 500,000 sales revenue, and its revenue is below 1 million, which is naturally a "micro" enterprise.
The second opinion holds that the determination of "operating income" should not be limited to the income recorded by the enterprise in the "main business income" account, but should be based on the total income obtained by the enterprise from the sale of commodities as "operating income".
Both seem to make sense. As we all know, real estate, as a special industry, has the characteristics of being different from the general industry in the process of operation and has the characteristics of legal "pre-sale" commercial housing. Although it does not recognize "main business sales revenue" for "pre-sale" income in accordance with the provisions of accounting standards, this does not affect the "taxable income" recognized by the tax authorities as a tax caliber, and it does not affect various government departments, including the Statistics Bureau, from including their "pre-sale income" into the annual national economic revenue system. I prefer the second opinion. Here's why:
First, the legal coexistence of pre-sale commercial housing and existing housing sales is an important source of income for real estate enterprises to obtain legally, and its income belongs to the sales income in the legal sense.
According to the Administrative Measures for the Pre-sale of Urban Commercial Housing, the pre-sale of commercial housing refers to the act of a real estate development enterprise (hereinafter referred to as a development enterprise) pre-selling the house under construction to the off-taker in advance, and the off-taker pays the deposit or house price. The contract signed between the real estate development enterprise and the off-taker in connection with the above acts is the pre-sale contract for commercial housing. According to the pre-sale contract of commercial housing, the real estate company and the pre-purchaser agree that the ownership of the completed commercial house will be transferred to the pre-purchaser within the agreed time, and the pre-purchase party will pay a deposit or part of the house payment to the pre-seller and accept the commercial house on schedule. According to the provisions of the Civil Code, if the parties conclude a contract in the form of a contract document, the contract shall be formed when the two parties sign or seal it. A contract formed in accordance with law shall take effect upon its establishment. Where laws or administrative regulations provide that approval, registration, or other formalities shall take effect, follow those provisions. Therefore, the pre-sale commercial housing has been established from the time the buyer and seller sign the agreement, and the income obtained is the legal commercial housing "off-plan" income, which together with the existing housing income constitutes the actual sales income of the real estate enterprise.
However, the sale and purchase contract of the house will only finally take legal effect when it is transferred from the property rights of the house. It is precisely for this reason that the accounting treatment of pre-sale revenue is recorded in the account with a "precautionary principle". Article 2 of the old version of the Accounting Standard for Business Enterprises No. 14 - Income, which is still implemented by the enterprise, stipulates that income refers to the total inflow of economic benefits formed by the enterprise in its daily activities that will lead to an increase in the owner's equity and is not related to the capital invested by the owner. The income covered by this standard includes income from the sale of goods, income from the provision of services and income from the transfer of asset use rights. Article IV stipulates that the proceeds from the sale of commodities shall be recognized only if the following conditions are met: (i) the enterprise has transferred the main risks and rewards of ownership of the goods to the buyer; According to the "principle of prudence", the accountant hangs the pre-received income on the "advance receipt" and does not directly count it in the "commodity sales income", that is, considering that the legal risk has not yet been transferred, but it cannot deny the legal judgment of the Civil Code that the pre-sale income belongs to the real estate company, that is, we cannot rely on the accounting record to deny the real existence of the enterprise to obtain the pre-sale income, let alone deny the legitimacy of the pre-sale income according to the accounting account setting.
Second, the accounting treatment of "advance income" for pre-sale does not exclude the tax law from recognizing "pre-sale income" as "taxable income".
Although there may be "differences in taxation" in the recognition of an economic transaction by taxation and accounting, accounting regulations do not necessarily exclude tax law, let alone deny the legal characterization of a certain matter by the tax authorities. For pre-sale income, tax law has traditionally treated it as "taxable income".
(1) The pre-sale income of real estate is the taxable income of income tax.
The Measures for the Treatment of Enterprise Income Tax for Real Estate Development and Operation Business (Guo Shui Fa [2009] No. 31) stipulate that the income obtained by an enterprise by formally signing a real estate sales contract or a real estate pre-sale contract should be recognized as the realization of sales income. Article 6 of the Article stipulates: "The income obtained by an enterprise through the formal signing of the "Real Estate Sales Contract" or the "Real Estate Pre-sale Contract" shall be recognized as the realization of the sales income, and shall be recognized in accordance with the following provisions: (1) Where the development product is sold by way of one-time full collection, the realization of the income shall be recognized on the date of actual receipt of the price or the receipt of the voucher (right) for the claimed price. (2) Where the sale of developed products is carried out by way of collection in installments, the realization of revenue shall be recognized in accordance with the price and payment date agreed upon in the sales contract or agreement. Where the payer pays in advance, the realization of revenue is recognized on the actual payment date. (3) Where the development products are sold by means of bank mortgage, the amount of income shall be determined according to the price agreed in the sales contract or agreement, and the down payment shall be recognized as the realization of the income on the date of actual receipt, and the balance shall be recognized as the realization of the income on the date of the transfer of the bank mortgage loan. (4) Where the sale of developed products is carried out by way of entrustment, the realization of revenue shall be recognized in accordance with the following principles (omitted). It can be seen that the tax law's grasp of "taxable income" is not limited to the part of the income that is financially included in the "main business income" account, but is comprehensively considered according to the two factors of actual collection and the date of payment recognized by the contract. It is not limited to whether the income obtained now and in the future is the nature of existing and off-plan housing, nor is it limited to how the accounting is handled, as long as the sales behavior is initiated, it can bring the expected benefits to the enterprise, that is, it is listed as "taxable income".
(2) The pre-sale income of real estate is also the taxable income of vat.
According to Article 5 of the Administrative Measures for the Pre-sale of Urban Commercial Housing (Amended and Issued by Decree No. 131 of the Ministry of Construction), the pre-sale of commercial housing shall meet the following conditions: All land use right transfer fees have been paid and land use right certificates have been obtained; 2. Construction project planning permits and construction permits have been held; 3. According to the calculation of commercial housing providing pre-sale, the funds invested in development and construction have reached more than 25% of the total investment in the construction of the project, and the construction progress and completion delivery date have been determined. For the VAT treatment of such "off-plan" income, Article 10 of the Interim Measures for the Administration of THE COLLECTION AND ADMINISTRATION of VAT collection on the sale of self-developed real estate projects by real estate development enterprises (SAT Announcement [2016] No. 18) stipulates that general taxpayers who sell self-developed real estate projects by way of advance collection shall prepay VAT at the 3% pre-levy rate when receiving the advance receipt. Although the "Pre-sale Contract for Commercial Housing" is also a standard contract produced by the housing management department, and it must also be signed online for unified supervision, different real estate has different regulations on the delivery of payments, some engage in one-time payment in full, some engage in installment payment, and some engage in mortgages. At present, the tax stipulates in specific operations: where the purchase contract does not explicitly adopt the direct collection method, it will be determined according to the method of advance collection, and when the advance payment is actually received, the ordinary invoice with the code number of '602' and the tax rate is 'no tax' is issued, the tax is prepaid in accordance with the regulations, and the non-tax invoice is not used for the buyer to handle the deed tax declaration and property rights registration procedures; if the VAT invoice of the applicable tax rate is issued first, the invoice is issued at the time of the occurrence of the tax obligation.
It can be seen that whether it is corporate income tax or value-added tax, pre-sale income is included in the scope of "tax revenue". Enterprise income tax is directly characterized as taxable income, and vat is based on the advance tax of the income, which is calculated at 9% when the "main business income" is carried forward, and the part of the withholding part is deducted. Therefore, the pre-sale income is not a non-taxable sales, but only in the design of paying VAT in two steps, first prepayment, then liquidation, more refund and less compensation, similar to the control of land value-added tax prepayment and then liquidation, which is due to the long development cycle of real estate enterprises need to be completed and accepted to accurately confirm the cost of the particularity of the decision, which only adopts the "prudent principle", and by no means pre-sale income is not the tax basis of the caliber of the tax law, unchanged as sales income treatment.
Third, the statistical agency includes the "pre-sale income" of real estate into the sales income.
The National Bureau of Statistics confirms the area and income of commercial housing sold according to the actual volume of commercial housing. On February 28, 2021, the National Bureau of Statistics issued the "Statistical Communiqué of the People's Republic of China on National Economic and Social Development in 2020", in the classification discussion of the sixth "fixed asset investment", it is clearly stated that the "pre-sale housing" is recognized as the sales area and income, and the excerpt is quoted as: the annual real estate development investment 141443 billion yuan, an increase of 7.0% over the previous year. Among them, residential investment 104446 billion yuan, an increase of 7.6%; office investment of 649.4 billion yuan, an increase of 5.4%; investment in commercial business buildings of 1,307.6 billion yuan, down 1.1%. At the end of the year, the area of commercial housing for sale was 498.5 million square meters, an increase of 290,000 square meters over the end of the previous year. Among them, the area of commercial residences for sale was 223.79 million square meters, a decrease of 940,000 square meters. It can be seen that the National Bureau of Statistics is based on the "destocking" of commercial housing to calculate the "sales area". From Appendix 7 "Main Indicators of Real Estate Development and Sales in 2020 and Their Growth Rate", it can also be clearly seen that the sales area of commercial housing includes the "pre-sale" part, otherwise, there will be no "personal mortgage loan" income. Because, only after the signing of the "Pre-sale Commercial Housing Contract", the real estate enterprise will obtain the "personal mortgage loan" from the bank.
As the most authoritative statistical organ, the National Bureau of Statistics has a statistical caliber sufficient to serve as a guide for all levels and departments of the country to understand and master the statistical caliber. Schedule 7 includes both investment and sales, and its grasp of sales caliber should be referred to by various departments. Its statement in sales has been very clear, that is, the sale of commercial housing in 2020 176086 million square meters, the cash income of 193115 million yuan, it does not distinguish between the part of the income that can be recognized by the accounting caliber, or the part of the "pre-sale" income hanging under the "advance receipt" account, but only the part of the income from the "personal mortgage loan". This also shows that its statistical income must include the "pre-sale housing" part. Otherwise, there is no need to express the "personal mortgage loan" part separately.
Fourth, the regulations on special statistical indicators of real estate stipulate that income includes "pre-sale income".
If the large-caliber income description adopted by the National Bureau of Statistics is not convincing enough to make pre-sale revenue an operating income, then the special regulations on statistics in the real estate industry should have a decisive effect. "Interpretation of Real Estate Statistical Indicators (Trial)" (Jianfang [2002] No. 66), as the most authoritative programmatic document of professional statistical indicators in the real estate industry, is clear at the beginning: According to the deployment and requirements of the statistical work during the "Tenth Five-Year Plan" period of the Ministry of Construction, we have formulated the "Interpretation of Real Estate Statistical Indicators (Trial)", which is hereby issued to you and implemented since the preparation of the 2001 annual report. Statistics on the real estate industry should be absolutely authoritative and instructive.
Point 2 of the development and operation situation in Article 8 is clear: The total operating income is the operating income obtained by the enterprise from the external transfer, sale, settlement and rental of development products. Specifically, it includes: 1. Land transfer income refers to the income obtained by real estate development enterprises (units) from the transfer of developed land and undeveloped land in accordance with national regulations. 2. The sales income of commodity housing refers to the income of real estate development enterprises (units) from the sale of commodity houses in the reporting period, which is collected at one time and is fully included in the sales income at one time, and if it is collected in installments according to the contract, it can be included in the income in installments according to the time specified in the contract. 3. Housing rental income refers to the rental income obtained by real estate development enterprises (units) in the reporting period, without changing the existing property ownership relationship, leasing all or part of the housing of the enterprise to other units or individuals. 4. Other income refers to the income of real estate development enterprises (units) engaged in addition to the above income during the reporting period, including sales income of supporting facilities, settlement income of construction projects, rental income of rental products, etc.
From the provisions of the above-mentioned second point of commodity housing sales revenue, it can be seen that its recognition caliber of revenue relies on the "collection time" in the year, that is, the actual collection time and the time that can be collected, regardless of whether the income obtained is existing income or off-plan income, let alone considering how the income is recorded, under what accounting account, and it is completely based on the "current" income and "future expectation" income that can be obtained according to the contract as the caliber of revenue recognition. Therefore, when counting the annual operating income, the income from pre-sale commercial housing collected this year should naturally belong to the "annual income" of the real estate industry.
In summary, no matter how the pre-sale commercial housing income is recorded in the accounting, and no matter how the value-added tax and income tax are used as the basis for taxation, it is only analyzed from the professional perspective of statistics, whether it is the hard requirements of industry statistical indicators or the practice of the statistical caliber of the National Bureau of Statistics, it must be used as the sales income of the statistical caliber.
In this case, Company B collected 800 million yuan of pre-sale housing income in 2021, and it is not appropriate to choose to be treated as a micro-enterprise according to the principle that assets and income can choose to choose to be treated as a micro-enterprise according to the principle that the assets and income can be selected as one or the other, only according to the conditions that the book sales income of 500,000 yuan can not reach 1 million. That is taken out of context, deviating from the basic principle that pre-sale commercial housing is the legal income stipulated by law, and it is not in line with the special legal provisions of the real estate industry on statistics.
In fact, putting aside the above professional legal analysis, it can be known by simple normal cognition alone, if a company with assets of up to 1.9 billion yuan and annual pre-sale revenue of up to 800 million yuan is defined as a "micro" enterprise, it seems that it can also challenge people's normal cognitive bottom line. After all, for now, it is still difficult for china's majority of medium-sized enterprises to reach an annual revenue of 800 million. Moreover, if so, it seems to violate the original intention of Circular 14. In order to show the legislative purpose, the article explains at the beginning that the policy is formulated "to support the development of small and micro enterprises and manufacturing industries, boost the confidence of market players, and stimulate the vitality of market players". It is conceivable that this document itself should take into account the national conditions of the scale of Chinese enterprises as the background for promulgation, with a distinct "encouragement" and "support" orientation, and will never understand the policy because of the possible technical flaws in some documents and the policy implementers who "take it out of context" from the legislative purpose, and support real estate enterprises of a scale similar to the annual income of 800 million yuan, which are not encouraged and supported by the state. This may be the original intention of the document, and it is also the proper meaning of understanding the study and application of specific policies in light of national conditions and legislative purposes.
The business is small, but the legal consequences are very large. We welcome exchanges between fiscal and tax colleagues in the real estate industry to ensure that the implementation of the policy is sound and reliable.