What are the methods of ODI investment?
When the outbound party invests using fixed assets, they should use the agreed price to debit the "long-term equity investment" account and the accumulated depreciation account. The original value of the fixed asset should be credited to the "fixed asset" account. The difference between the net price agreed upon and the net value of the fixed assets should be debited or credited to the "capital reserve" account.
When the outbound party invests using inventory, they should use the agreed price to debit the "long-term equity investment" account, and the original value of the inventory should be credited to the "raw material", "finished product" and other accounts. The difference between the agreed price and the actual cost should be debited or credited to the "capital reserve" account. Inventory allocated by planned cost differences must also be distributed to the cost differences of the outbound inventory through the "material cost difference" account.
If the outbound party invests using unaccounted intangible assets (such as land use rights), they should debit the "long-term equity investment" account according to the assessed value, and credit the "capital reserve" account.
What taxes need to be paid for ODI investment ?
ODI investment requires payment of value-added tax, urban construction tax, education surcharge, local education surcharge, stamp duty, and income tax. When resident enterprises (hereinafter referred to as enterprises) use non-monetary assets for ODI investment and recognize non-monetary asset transfer income, they can evenly distribute the income over not more than five years and include it in the corresponding year's taxable income, and pay enterprise income taxes according to the regulations.
We remind you that when enterprises use non-monetary assets for ODI investment, they should evaluate the non-monetary assets and calculate the transfer income based on the remaining balance after deducting the fair value of the evaluated non-monetary assets from the taxable basis. Enterprises should recognize non-monetary asset transfer income when the investment agreement takes effect and stock registration is processed.
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