Circular on Income Tax Treatment Issues Relevant to the Internal Disposal of Assets by Foreign-invested Enterprises
关于外商投资企业内部处置资产有关所得税处理问题的通知
The Circular specifies the circumstances under which there is a disposal of assets internally and the circumstances under which it is not deemed a disposal of assets internally.
(Issued by the State Administration of Taxation on October 14 2005. )
(国家税务总局于二零零五年十月十四日发布。)
Guo Shui Han [2005] No.970
国税函 [2005] 970号
Offices of the State Administration of Taxation of provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans and the Local Taxation Bureau of Shenzhen Municipality:
各省、自治区、直辖市和计划单列市国家税务局，深圳市地方税务局：
Pursuant to relevant provisions of the PRC Foreign-invested Enterprise and Foreign Enterprise Income Tax Law and its Implementing Rules, we hereby notify you concerning income tax treatment issues relevant to the internal disposal of assets in organizations and establishments established in China by foreign-invested enterprises and foreign enterprises (hereinafter collectively referred to as 'Enterprises') as follows:
根据《中华人民共和国外商投资企业和外国企业所得税法》及其实施细则的有关规定，现就外商投资企业和外国企业在中国境内设立机构、场所(以下统称企业)，在内部处置资产有关所得税处理问题通知如下：
1. When an Enterprise disposes of assets internally (including self-manufactured assets and assets purchased from third parties), no income shall be recognized unless the assets are transferred abroad; the historical costs of the relevant assets shall continue to accrue.
一、 企业内部处置资产(包括各项自制和外购资产)，除将资产转移至境外以外，不确认收入；相关资产的历史成本延续计算。
2. For the purposes of Article 1 of this Circular, the phrase "disposal of assets internally" means an act of disposal under which the ownership of an asset does not change in form or substance, and includes but is not limited to the following circumstances:
二、 本通知第一条所述内部处置资产是指资产所有权属在形式和实质上均不发生改变的处置行为，包括但不限于以下情形：
(1) using the asset to produce, manufacture or process a different product;
(一) 将资产用于生产、制造、加工另一产品；
(2) changing the shape, structure or capabilities of the asset;
(二) 改变资产形状、结构或性能；
(3) changing the purpose of the asset (e.g. conversion of self-constructed commodity premises to self-use, or operation for own account);
(三) 改变资产用途(如，自建商品房转为自用或经营)；
(4) transfer of the asset between the head office and a (sub-)branch; or
(四) 将资产在总机构及其分支机构之间转移；
(5) a mixture of two or more of the foregoing circumstances.
(五) 上述两种或两种以上情形的混合。
The transfer of assets to a third party by an Enterprise under the following circumstances shall not be deemed a disposal of assets internally as the ownership of the assets changes:
企业将资产移送他人的下列情形，因资产所有权属已发生改变而不属于内部资产处置：
(1) the asset is used for marketing or promotion purposes;
(一) 用于市场推广或推销；
(2) the asset is used for entertainment purposes;
(二) 用于交际应酬；
(3) the asset is used for staff and worker bonuses or benefits;
(三) 用于职工奖励或福利；
(4) the asset is distributed as dividends;
(四) 用于股息分配；
(5) the asset is donated to a third party; or
(五) 用于对外捐赠；
(6) other purposes that result in a change in the ownership of the asset.
(六) 其他改变资产所有权属的用途。
3. Tax treatment of the disposal of assets internally by Enterprises for the purpose of turnover tax and other taxes shall continue to be handled in accordance with relevant current provisions.
clp reference:3210/05.10.14prc reference:国税函 [2005] 970 号promulgated:2005-10-14三、 企业内部处置资产的流转税及其他税种的税务处理，仍按现行有关规定执行。
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