Sou Hu Cai Jing·2025-09-19 16:12Group 1 - Several listed companies, including Junhe Co. and Shanghai Huguang, have announced tax payment corrections due to errors in the tax treatment of convertible bond interest expenses, resulting in underpayment of corporate income tax [2][5] - Convertible bonds are a hybrid financing tool that combines debt and equity characteristics, allowing bondholders to convert them into the company's common stock under certain conditions [2][3] - The issuance of convertible bonds typically offers lower interest rates compared to regular corporate bonds, providing companies with a relatively low-cost financing channel [2][3] Group 2 - The accounting treatment of convertible bonds involves splitting the total raised funds into debt and equity components based on the market interest rate of non-convertible bonds [3][4] - For example, a company issuing convertible bonds with a face value of 1 million yuan and a coupon rate of 1% would have a debt component valued at approximately 943,400 yuan and an equity component of about 56,600 yuan [3][4] - The actual interest expenses recognized under the effective interest method differ from the cash interest paid, leading to adjustments in the book value of the debt component and a reduction in the initially recognized equity component [4] Group 3 - Current corporate income tax law emphasizes the "actual occurrence" principle, which differs from accounting treatment, leading some companies to mistakenly deduct all recognized interest expenses for tax purposes [5][6] - Only the actual interest paid to convertible bondholders can be deducted from corporate income tax, which may require companies to adjust their taxable income accordingly [5][6] - Companies must also be cautious about the tax treatment of issuance costs related to convertible bonds, as these may not be deductible depending on whether they are classified as equity or debt financing expenses [6]