Study On The Income Tax Accounting In Business Combinations

With the development of China’s economy and the market economy gradually improved,an increasing number of enterprises choose to take the way of business combination in orderto rapidly expand enterprises and diversify business territories, finally keeping them in aninvincible position. Thus enterprise merger is playing a more and more important role ineconomic field. The income tax, as a major influencing factor of enterprise merger, has beenincreasingly getting attention from academic and practical fields. At the same time, Chinapromulgated《Accounting Standards for Enterprises No.18-Income Tax》,《Notice on variousissues regarding the handling of corporate income tax of operations related to enterpriserestructuring》and relevant laws and regulations to lay a solid foundation in income taxaccounting in business combination. The former determines related accounting for income taxin enterprise merger; by introducing the general taxation treatment and the special taxationtreatment, the latter prescribes how to calculate relevant income tax and tax basis of assets indifferent situations.However, accounting standards and tax laws belongs to two different fields. The formerprefer to truthfully reflect the financial position and operating results in the perspective ofenterprise; the later tend to emphasize the tax liability in the perspective of national finance.Several problems in the comprehensive use of accounting standards and related tax laws donot get good settlement. Therefore, this paper firstly analyzes《China Accounting Standards》and《Notice on various issues regarding the handling of corporate income tax of operationsrelated to enterprise restructuring》to make preparation for the following discussion. Secondly,based on the traditional classification of business combinations, this paper, combined with thegeneral tax treatment and special treatment, put forward a detailed merger classification.However, it should be pointed out that this paper would limit the study to more glaringproblems which means holdings merger under the same control and consolidation by mergerunder different control. This paper points out several special areas which need to pay attentionand mainly solve the issues which is how to calculate the income tax and the tax base of related assets under the special taxation treatment by using non-100%share-based payment.During this process, this text also pointed out the essence of special taxation treatment. At last,this paper summarizes the research results to get the final conclusion.