PWC Survey: Corporate Tax Technology Maturity Is Still In Its Infancy.

Recently, PWC released the 2016 China tax technology maturity survey, which shows that about half (51%) of the surveyed Chinese enterprises have already formulated or are formulating cross year tax technology strategy or development plan, but 31% of the surveyed enterprises do not have the allocation of tax science and technology resources, and enterprises are still in the primary stage of relying on the existing resources for the layout of tax technology.

The survey data were collected from 151 enterprises in mainland China and Hongkong from October 2016 to November.

The survey shows that nearly half (46%) of the tax information used by Chinese enterprises in daily use is provided by e-mail or interim reports, and the existing management information system (such as ERP) lacks unified services.

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From the point of view of tax control and analysis, 49% of the respondents said they had used spreadsheets or database tools to record the date of relevant tax filing.

Another 12% of the respondents did not use any tools.

From tax

In terms of decision-making level, 60% enterprises only use spreadsheets to model and analyze different situations, and lack of systematic tax analysis tools support.

Zhuang Shuqing, a partner in charge of international tax service in PWC Asia Pacific, said: "the large number of subordinate branches and the difficulty of unified and effective management of tax related risks bring unprecedented challenges to the tax administration of large and medium-sized enterprises in China."

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The Ministry of Finance and the State Administration of Taxation issued the circular on implementing the tax support policy to reduce the leverage ratio of enterprises, and implemented 8 tax policies to reduce the leverage ratio of enterprises.

The circular pointed out that we should fully understand the importance of implementing the tax support policy for reducing leverage.

In recent years, the leverage ratio of Chinese enterprises is high, the scale of debt growth is too fast, and the debt burden of enterprises is increasing.

The CPC Central Committee and the State Council have made strategic decisions on reducing the leverage ratio of enterprises from a strategic height. Deleveraging has been regarded as one of the five major tasks of the structural reform of supply side, which is "three down, one down and one subsidy".

"Opinions" will "implement and improve the policy of supporting tax reduction and leveraging" as an important task.

The finance and taxation departments at all levels should fully understand the importance of actively and steadily reducing the leverage ratio of enterprises, resolutely implement the central decision-making and deployment, strictly implement the relevant tax policies in strict accordance with the "opinions", give full play to the role of tax functions, effectively lighten the burden of enterprises, reduce the cost of enterprises, and create a favorable external environment for enterprises to reduce leverage.

It is clear that the relevant tax support policies should be implemented.

1, enterprises in line with the provisions of the tax law, such as the acquisition, merger and debt restructuring of equity (assets), can enjoy preferential tax policies for enterprise income tax in accordance with the provisions of the tax law.

2, enterprises investing in non monetary assets can enjoy the enterprise income tax policy within 5 years according to the regulations.

3, when an enterprise goes bankrupt and cancellates, and when the enterprise income tax is liquidated, it can deduct the relevant liquidation expenses and the wages of workers, social insurance premiums and statutory compensations before taxes.

4, the creditor's rights loss that enterprises meet the prescribed conditions of the tax law can be deducted according to the regulations when calculating the taxable income of enterprise income tax.

5, a loan loss reserve required by a financial enterprise in accordance with the regulations, which is in conformity with the provisions of the tax law, can be deducted before the enterprise income tax.

6, in the process of enterprise restructuring, enterprises shall pfer all or part of the physical assets and their associated claims, liabilities and labor force to other units and individuals through merger, division, sale and replacement, and the pfer of goods, real estate and land use rights involved shall not be subject to VAT.

7, the land value-added tax, deed tax and stamp duty related to the reorganization and restructuring of enterprises can enjoy relevant preferential policies.

8, taxpayers who meet the policy conditions of credit asset securitization can enjoy relevant preferential policies.

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