Core Viewpoint - The article discusses the tax regulations for secondary branches of enterprises in China, specifically regarding the distribution of corporate income tax and the conditions under which these branches are exempt from local tax distribution. Group 1: Tax Distribution Regulations - Secondary branches that do not have operational functions and do not pay VAT or business tax locally are exempt from local corporate income tax distribution [4] - Small and micro enterprises recognized in the previous year are also exempt from local corporate income tax distribution for their secondary branches [4] - Newly established secondary branches are not required to distribute corporate income tax locally in the year of establishment [7][9] - Branches that are canceled within the year are exempt from local corporate income tax distribution starting from the date of tax registration cancellation [8] Group 2: Tax Calculation and Filing - Consolidated tax-paying enterprises must calculate their annual corporate income tax within five months after the end of the year, deducting pre-paid taxes from the main and branch offices [6] - Non-legal branches that cannot provide necessary tax distribution documents will be treated as independent taxpayers and must pay local corporate income tax [5]

Core Viewpoint - The new VAT law effective from January 1, 2026, will require companies to pay VAT on certain employee benefits, such as subsidized meals and housing, which were previously exempt. The removal of specific clauses from the law indicates a shift in how these services are taxed, potentially leading to increased costs for employers and changes in employee compensation structures [3][4][5]. Summary by Sections VAT Law Changes - The VAT law has officially removed the exemption for services provided by employers to employees, meaning that if these services are charged, they will be subject to VAT [3][4]. - The law no longer considers the provision of free services by employers to employees as taxable transactions, thus exempting them from VAT [4][5]. Implications for Employers - Companies may opt to provide free services, such as meals and housing, to avoid VAT liabilities, which could lead to adjustments in employee salaries to reflect these benefits [6]. - The VAT rates applicable for these services are generally 6% for regular taxpayers and 3% for small-scale taxpayers [6]. Employee Compensation - The law clarifies that employee salaries are not subject to VAT, maintaining consistency with previous regulations [5]. - The potential shift to providing benefits in lieu of salary could impact how employees perceive their total compensation package [6].