Which is more tax-saving?

A is a clothing company that has been operating for many years. He plans to open 21 shops in many cities in 2122. As they are all newly established, the profits of each of these branches will not exceed 1 million.

Branch:

When calculating the tax, the branch pays the tax in summary, and after the summary, the profit will be a lot, which will exceed the standards of small and micro enterprises, so they can't enjoy the tax preferential treatment, and they need to pay the tax according to 25%, which is about 5 million.

subsidiaries:

each subsidiary is registered separately, so each subsidiary meets the standards of small and micro enterprises in terms of the number of employees and income, and the tax is 5%. After calculation, it is about one million, and the tax before and after is about four million. Therefore, it is more appropriate to set up a subsidiary from the aspect of tax saving alone.

Example: Dalian Seafood Hotel & Catering Company is a well-known enterprise, and it plans to open 21 branches in other cities in 2122. As they are all newly established, the initial budget for each of these 21 stores is less than 1 million yuan.

Q: Is it more tax-efficient to set up branches or subsidiaries in the 21 branches?

1. In the branch, corporate income tax needs to be paid in a consolidated way, which exceeds the standard of small and micro enterprises, so they can't enjoy preferential tax treatment, and the tax rate is 25%. Total corporate income tax of 21 stores = 21 * 111 * 25% = 5 million yuan.

2. Subsidiaries, which pay taxes independently and meet the standards of small and low-profit enterprises, can enjoy tax concessions for small and micro enterprises, and need to pay enterprise income tax at a tax rate of 5%. Total corporate income tax of 21 stores = 21 * 111 * 5% = 1 million yuan tax saving = 511-111 = 4 million yuan.

Reminder

1. Branches do not enjoy preferential policies for small-scale low-profit enterprises alone. For branches, they should be merged into the head office to collect and pay enterprise income tax. If the collected data meets the conditions of small-scale low-profit enterprises, they can enjoy preferential policies for small-scale low-profit enterprises as a whole.

2. If the branches do not merge into the head office and choose to pay taxes separately according to independent taxpayers, they can't enjoy the preferential policies of small-scale low-profit enterprises, and they can only file tax returns at the basic tax rate of 25%.

3. If the head office calculates itself and all its branches together, if the annual taxable income, the number of employees and the total assets meet the requirements, it can enjoy the preferential income tax policy for small and meager profit enterprises. Even if the index of a single branch meets the requirements, it can't enjoy the discount.