Tax treatment of open shares and actual debts，Do you understand?

Today, Hong Kong Information Communication - I will introduce to you the tax treatment of open shares and actual debts.，Let’s learn together! one、VAT stipulates that the essence of actual debt is borrowing，investor

Require

The principal invested can be recovered，and charge fixed interest，According to the attachment "Sales and Services" of No. 36 of the Business Tax to VAT Reform、intangible assets、Real Estate Commentary" Article 1, Item 5, Paragraph 1：“Investing monetary funds to receive fixed profits or guaranteed profits，Pay VAT as per loan services”。

According to this rule，If investors

Require

Collect fixed profits or guaranteed profits，or compulsory dividends、pre-allocated、Equity maintenance fees and other forms

Require

Fixed income does not bear operating risks，All constitute interest income in the nature of loans as described in Circular No. 36，VAT payable。

Except for the fixed income mentioned in Circular 36，If it is agreed in the equity investment that the principal can be recovered，Whether the equity is repurchased、Betting or other means to achieve，Taxable behavior that also constitutes VAT，Finance and taxation[2025]140Article 1 of the document："Guaranteed income、remuneration、Fund occupation fee、compensation，It refers to the investment income that clearly promises in the contract that all the principal will be recovered at maturity."。

This model is commonly seen in asset management products，Nominally become a shareholder of the project company through equity transfer/capital increase，However, the shareholders of the project company have the obligation to repurchase the equity at a premium when it expires.，As a result, asset management products are essentially providing loans to project companies.。Asset management product managers should pay value-added tax on the premium part of the equity repurchase price paid by project company shareholders to asset management products.。

two、Income tax deduction if the open-share real debt business constitutes a mixed investment business as stated in the National Tax Announcement No. 41 of 2013，Article 1 of the article stipulates that “enterprise mixed investment business，Refers to the investment business that has the dual characteristics of equity and debt。

Mixed investment business that meets the following conditions at the same time，Corporate income tax treatment shall be carried out in accordance with this announcement”，That is, as long as the conditions are met，The interest actually paid by the borrower to the investor can be deducted before income tax.，At the same time, the price difference between equity investment and redemption can also be included in the current loss as debt restructuring income (loss).。

Main conditions

yes：

1. After the invested enterprise accepts investment，Interest needs to be paid regularly according to the interest rate stipulated in the investment contract or agreement (or guaranteed interest must be paid regularly、fixed profit、fixed dividend)；
2. Have a clear investment period or specific investment conditions，And after the investment period expires or certain investment conditions are met,，An investment in which the investor bears little or no investment risk，In fact, it is a form of financing for enterprises，The investment enterprise needs to redeem the investment or repay the principal；
3. The investing company does not have ownership of the net assets of the invested company.；
4. Investment companies do not have the right to vote or be elected；
5. The investing enterprise does not participate in the daily production and operation activities of the invested enterprise。

Obviously for the borrower，The same expenditure，If you are paying interest on a debt，Can be deducted before income tax，Has tax deduction effect，More beneficial to borrowers。If equity dividends are paid，cannot be deducted before tax。However, the State Administration of Taxation added the above five conditions when applying the pre-tax deduction for interest.，The effect of this document is greatly reduced，In practice, few companies can actually enjoy，Most people take detours。

three、Stamp duty as an equity investment business，After receiving the funds, the invested enterprise，Included in the "paid-in capital" or "capital reserve" account，At the same time, the industrial and commercial change registration was made，According to stamp duty regulations，Tax required on business book stamps，But in essence, the business is a "debt"，Should this business pay stamp tax according to the business account book or according to the loan contract?

Tax regulations also include the principle of taxation based on business substance.，However, in tax collection and administration practice, tax authorities may levy stamp tax on equity based on loopholes in collection and administration and considerations of anti-tax avoidance.，This will cause the same business to be subject to stamp duty、income tax、Inconsistencies in VAT processing business，That is to say, the business level needs to communicate with the local tax authorities.。If you still want to know more about this aspect，Welcome to consult Hong Kong Xintong at any time!

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