Company earnings distribution｜Dividend distribution calculation & withholding & second-generation he

Company profit distribution｜Dividend distribution calculation & taxation & withholding & second-generation health insurance

The company has a net profit after tax in the annual settlement, do you need to pay dividends in the next year? There are several considerations.

1. The company's future capital needs

2. Shareholders’ expectations of the company’s net worth

3. The tax burden of the company

4. Shareholders' tax burden and second-generation health insurance

This article mainly discusses the tax burden and the second-generation health insurance.

Example 1: Company X1 has an after-tax net profit of RMB 3,000,000. After 10% of the statutory surplus reserve is allocated, there is still RMB 2,700,000 available for distribution. There is 1 shareholder, and the shareholder has no other sources of income.

Option 1. No distribution of earnings; the company pays tax on undistributed earnings of 135,000 yuan

If the surplus is not distributed before December 31, X2, then on May 31, X3, the company will have to pay an undistributed surplus tax of 135,000 yuan (2,700,000 X 5%).

Shareholders do not have to pay personal comprehensive income tax and second-generation health insurance (supplementary premiums).

Option 2: Full distribution of surplus; shareholders have to pay personal comprehensive income tax & second-generation health insurance

Personal comprehensive income tax 273,200 yuan; second-generation health insurance (supplementary premium) 45,373 yuan

Dividend income, according to the income tax law, will have an 8.5% "deductible tax amount", but the upper limit for each filing household is 80,000 yuan per year. If the company has only one shareholder and distributes the 2,700,000 surplus in full, then the company does not have to pay undistributed surplus tax.

However, shareholders must pay 353,200 yuan minus 80,000 yuan (tax deductible) personal comprehensive income tax of 273,200 yuan.

# (2,700,000 – 124,000【Standard Deduction】 – 92,000【Exemption Amount】) X 30% – 392,000【Progressive Difference】= 353,200

# 2,700,000 X 8.5% = 229,500, but up to 80,000

Assuming that the company has five or more employees, and the minimum insurance level for the person in charge is 45,800 yuan, in addition to the original monthly health insurance premium, the second-generation health insurance (supplementary premium) payable is 45,373 yuan.

#(2,700,000–45,800 X 12) X 2.11% = 45,373

Example 2: Company X1’s net profit after tax is 222,222 yuan. After accruing 10% of the statutory surplus reserve, there is still 200,000 yuan available for distribution. There is 1 shareholder, and the shareholder is single. Assuming the shareholder’s other income is as follows, let’s calculate how to file tax returns most favorable.

Situation zero, no distribution of earnings; the company pays tax on undistributed earnings of 10,000 yuan

If the surplus is not distributed before December 31, X2, then on May 31, X3, the company will have to pay an undistributed surplus tax of 10,000 yuan (200,000 X 5%).

Shareholders do not increase personal comprehensive income tax and second-generation health insurance (supplementary premiums).

Situation 1. It is more favorable to combine taxation of dividends.

Personal comprehensive income tax increase (7,000) yuan; second-generation health insurance (supplementary premium) 4,220 yuan

Calculation:

credited to dividends

[(700,000-200,000)+207,000]-124,000 (standard deduction)-92,000 (exemption)

=477,000*5%-17,000=6,850

200,000*2.11%=4,220

#200,000 X 8.5% = 17,000, (up to 80,000)

Before dividends

[(700,000-207,000)]-124,000 (standard deduction)-92,000 (exemption)

=277,000*5%=13,850

6,850-13,850= (7,000)

Situation 2: Consolidated taxation of dividends

Personal comprehensive income tax increased by 7,000 yuan; second-generation health insurance (supplementary premium) 4,220 yuan

Calculation:

credited to dividends

[(1,000,000-207,000)+200,000]-124,000 (standard deduction)-92,000 (exemption)

=(777,000*12%-39,200)-17,000=37,040

200,000*2.11%=4,220

#200,000 X 8.5% = 17,000, (up to 80,000)

Before dividends

[(1,000,000-207,000)]-124,000 (standard deduction)-92,000 (exemption)

=577,000*12%-39,200 =30,040

37,040-30,040 = 7,000

Situation 3: Consolidated taxation of dividends

Personal comprehensive income tax increased by 23,000 yuan; second-generation health insurance (supplementary premium) 4,220 yuan

Calculation:

[(1,500,000-207,000)+200,000]-124,000 (standard deduction)-92,000 (exemption)

=(1,277,000*20%-140,000)-17,000=98,400

200,000*2.11%=4,220

#200,000 X 8.5% = 17,000, (up to 80,000)

Before dividends

(1,500,000-207,000)-124,000 (standard deduction)-92,000 (exemption)

=1,077,000*20%-140,000=75,400

98,400-75,400=23,000

Situation 4: Consolidated taxation of dividends

Personal comprehensive income tax increased by 63,000 yuan; second-generation health insurance (supplementary premium) 4,220 yuan

Calculation:

[(6,000,000-207,000)+200,000]-124,000 (standard deduction)-92,000 (exemption)

=(5,777,000*40%-864,000)-17,000=1,432,600

200,000*2.11%=4,220

#200,000 X 8.5% = 17,000, (up to 80,000)

Before dividends

6,000,000-207,000-124,000 (standard deduction)-92,000 (exemption)

=5,577,000*40%-864,000=1,366,800

1,429,800-1,366,800=63,000

Situation 5: It is more favorable to separate taxation of dividends.

Personal comprehensive income tax increased by 56,000 yuan; second-generation health insurance (supplementary premium) 4,220 yuan

Separate taxation:

Calculation:

6,000,000-207,000-124,000 (standard deduction)-92,000 (exemption)

=5,577,000*40%-864,000=1,366,800

200,000*2.11%=4,220

dividend

200,000*28%=56,000

Tax payable in X1:

1,366,800+56,000=1,422,800

Before dividends

6,000,000-207,000-124,000 (standard deduction)-92,000 (exemption)

=5,577,000*40%-864,000=1,369,600

1,422,800-1,366,800=56,000

The subsequent risk of choosing not to distribute the surplus

If the company does not distribute dividends for a long time, it may pay less tax at the moment, but the company's "net worth" will increase year by year. When the company is going to be liquidated in the future, if the part exceeds the original shareholder's capital contribution, a withholding voucher (that is, dividend income) needs to be issued. At that time, the shareholder will still have to pay comprehensive income tax.

Shareholders still have to pay personal comprehensive income tax if the surplus is transferred to capital increase

With the "surplus capital increase", although the company does not need to pay undistributed earnings tax, and shareholders do not receive cash (cash dividends), but they receive dividends distributed in the form of stocks (stock dividends), when reporting comprehensive income tax in the following year, they still It needs to be included in the taxation, and then we will return to the above-mentioned examples.

Dividend payment to foreign shareholders should pay attention to withholding

The company distributes dividends to non-domestic individuals or foreign profit-making enterprises. When paying dividends, the company is the withholding agent and must handle the withholding according to the prescribed withholding rate of 21%. And within 10 days from the date of withholding tax, pay and issue a withholding voucher, and file a declaration with the competent tax collection agency.

in conclusion:

According to the current statistics of the Executive Yuan, the average annual income of Chinese people is about 600,000 to 700,000 yuan. From the above example, it is more beneficial for the company to distribute dividends. If the personal income is low, the distribution of dividends may also lead to personal comprehensive income tax refunds.

Source: Compiled by the General Office of Administration and Statistics, the Tax Administration of the Ministry of Finance, the National Health Insurance Administration, and Jingxun United Accounting Firm

Features

Welcome to contact us for details, please contact us for accounting firms

There are services all over the country. Jingxun United Accounting Firms start-up companies set up bookkeeping, tax declaration, accounting, tax saving, capital visa fees, Taipei, Taoyuan, Taichung, Yunlin, Tainan