SEC Info - Baidu, Inc. - ‘20-F’ for 12/31/19

Baidu, Inc. – ‘20-F’ for 12/31/19 – ‘R21’

On: Friday, 3/13/20, at 5:21pm ET · For: 12/31/19 · Accession #: 1193125-20-73092 · File #: 0-51469

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/13/20 Baidu, Inc. 20-F 12/31/19 146:31M Donnelley … Solutions/FA

Document/Exhibit Description Pages Size 1: 20-F Annual Report by a Foreign Non-Canadian Issuer HTML 3.86M 2: EX-4.83 Instrument Defining the Rights of Security Holders HTML 76K 3: EX-4.84 Instrument Defining the Rights of Security Holders HTML 71K 4: EX-4.85 Instrument Defining the Rights of Security Holders HTML 72K 5: EX-4.86 Instrument Defining the Rights of Security Holders HTML 92K 6: EX-4.87 Instrument Defining the Rights of Security Holders HTML 59K 7: EX-4.88 Instrument Defining the Rights of Security Holders HTML 58K 8: EX-4.89 Instrument Defining the Rights of Security Holders HTML 74K 9: EX-4.90 Instrument Defining the Rights of Security Holders HTML 70K 10: EX-4.91 Instrument Defining the Rights of Security Holders HTML 71K 11: EX-8.1 Opinion of Counsel re: Tax Matters HTML 37K 14: EX-13.1 Annual or Quarterly Report to Security Holders HTML 38K 15: EX-13.2 Annual or Quarterly Report to Security Holders HTML 38K 12: EX-12.1 Statement re: Computation of Ratios HTML 42K 13: EX-12.2 Statement re: Computation of Ratios HTML 42K 16: EX-15.1 Letter re: Unaudited Interim Financial Info HTML 39K 17: EX-15.2 Letter re: Unaudited Interim Financial Info HTML 40K 18: EX-15.3 Letter re: Unaudited Interim Financial Info HTML 40K 73: R1 Cover Page HTML 112K 126: R2 Consolidated Balance Sheets HTML 199K 107: R3 Consolidated Balance Sheets (Parenthetical) HTML 65K 31: R4 Consolidated Statements Of Comprehensive Income HTML 159K (Loss) 70: R5 Consolidated Statements Of Comprehensive Income HTML 40K (Parenthetical) 123: R6 Consolidated Statements of Cash Flows HTML 232K 106: R7 Consolidated Statements Of Shareholders' Equity HTML 129K 24: R8 Organization, Consolidation and Presentation Of HTML 236K Financial Statements 75: R9 Summary of Significant Accounting Policies HTML 267K 42: R10 Business Combinations HTML 95K 56: R11 Investments HTML 374K 132: R12 Accounts Receivable HTML 87K 84: R13 Other Assets HTML 99K 43: R14 Fixed Assets HTML 84K 57: R15 Goodwill and Intangible Assets HTML 207K 133: R16 Accounts Payable and Accrued Liabilities HTML 88K 85: R17 Loans Payable HTML 55K 41: R18 Notes Payable HTML 150K 58: R19 Convertible Notes HTML 60K 129: R20 Leases HTML 83K 113: R21 Income Taxes HTML 238K 36: R22 Employee Defined Contribution Plan HTML 43K 82: R23 Commitments and Contingencies HTML 95K 130: R24 Redeemable Noncontrolling Interests HTML 89K 114: R25 Shareholders' Equity HTML 186K 37: R26 Earnings Per Share ("Eps") HTML 293K 83: R27 Share-Based Awards Plan HTML 203K 131: R28 Related Party Transactions HTML 160K 112: R29 Segment Reporting HTML 371K 88: R30 Fair Value Measurements HTML 479K 136: R31 Subsequent Events HTML 43K 55: R32 Significant Accounting Policies (Policies) HTML 353K 40: R33 Organization, Consolidation and Presentation Of HTML 175K Financial Statements (Tables) 87: R34 Summary of Significant Accounting Policies HTML 105K (Tables) 135: R35 Business Combinations (Tables) HTML 88K 54: R36 Investments (Tables) HTML 356K 39: R37 Accounts Receivable (Tables) HTML 89K 89: R38 Other Assets (Tables) HTML 98K 134: R39 Fixed Assets (Tables) HTML 80K 101: R40 Goodwill and Intangible Assets (Tables) HTML 207K 117: R41 Accounts Payable and Accrued Liabilities (Tables) HTML 87K 81: R42 Notes Payable (Tables) HTML 150K 35: R43 Leases (Tables) HTML 78K 100: R44 Income Taxes (Tables) HTML 229K 116: R45 Commitments and Contingencies (Tables) HTML 83K 80: R46 Redeemable Noncontrolling Interests (Tables) HTML 84K 34: R47 Shareholders' Equity (Tables) HTML 175K 102: R48 Earnings Per Share ("Eps") (Tables) HTML 294K 115: R49 Share-Based Awards Plan (Tables) HTML 220K 137: R50 Related Party Transactions (Tables) HTML 155K 91: R51 Segment Reporting (Tables) HTML 369K 52: R52 Fair Value Measurements (Tables) HTML 470K 67: R53 Organization, Consolidation and Presentation Of HTML 57K Financial Statements - 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Cayman Islands and BVI

Under the current laws of the Cayman Islands and BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payment of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

Hong Kong

Subsidiaries in Hong Kong are subject to Hong Kong Profits Tax rate at 16.5%

, and foreign-derived income is exempted from income tax. There are no withholding taxes in Hong Kong on remittance

dividends.

Japan

As a result of the Japanese tax regulations amendments, the effective income tax rate are approximately 32%, 31% and 31% for the years ended December 31, 2017, 2018 and 2019, respectively.

China

Effective from January 1, 2008, the PRC’s statutory, Enterprise Income Tax (“EIT”) rate is 25%. Preferential EIT rates at 15% and 10% are available for qualified “High and New Technology Enterprises” (“HNTEs”) and “Key Software Enterprise” (“KSE”), respectively. The HNTE certificate is effective for a period of

three years

and the KSE is subject to relevant governmental authorities’ annual assessment based on self-assessment supporting documents filed with the tax authorities each year.

Baidu Online, Baidu China and Baidu International enjoyed a reduced tax rate of 10% as qualified KSEs in 2017

and 2018

. Certain other PRC subsidiaries and VIEs, including Baidu Netcom, are qualified HNTEs and enjoy a

reduced tax rate of 15% for the years presented, which will expire in 2020, 2021 and 2022.

Certain entities must

file required supporting documents with the tax authorities before using the preferential rates. Whether the entity is entitled to enjoy a preferential rate as a KSE is subject to relevant governmental authorities’ assessment each year. An entity could

re-apply

for the HNTE certificate when the prior certificate expires. Historically, all of the Company’s subsidiaries and VIEs successfully

re-applied

for the certificates when the prior ones expired.

A certificate for the current year might be obtained in the following year as a result of the stringent inspection and approval process by the governmental authorities. The Company would record an income tax reversal in the year when the certificate is obtained for the over-paid or over-accrued provisional tax in connection with the grant of a more favorable tax rate for the prior year.

Under the current EIT Law, dividends for earnings derived from January 1, 2008 and onwards paid by PRC entities to any of their foreign

non-resident

enterprise investors are subject to a 10% withholding tax. A lower tax rate will be applied if tax treaty or arrangement benefits are available. Under the tax arrangement between the PRC and Hong Kong, the reduced withholding tax rate for dividends paid by PRC entities is 5% provided the Hong Kong investors meet the requirements as stipulated by relevant PRC tax regulations, such as the beneficiary owner test. Capital gains derived from PRC are also subject to a 10% PRC withholding tax.

Income (loss) before income taxes consists of:


	For the years ended December 31,
	2017			2018		2019			2019
	RMB			RMB		RMB			US$
	(In millions)
PRC		22,088			23,524		13,076			1,878
Non-PRC		(805	)		3,801		(13,416	)		(1,927	)

		21,283			27,325		(340	)		(49	)

Except for the investment related gain recognized, the

pre-tax

losses from

non-PRC

operations consist primarily of operating costs, administration expenses, interest expenses and share-based compensation expenses.

Income taxes consist of:


	For the years ended December 31,
	2017			2018			2019			2019
	RMB			RMB			RMB			US$
	(In millions)
Current income tax		4,224			6,184			3,564			511
Income tax refund due to reduced tax rate		(473	)		(680	)		(920	)		(132	)
Adjustments of deferred tax assets due to change in tax rates		7			—			9			1
Deferred income tax benefit		(763	)		(761	)		(705	)		(101	)

		2,995			4,743			1,948			279

The reconciliation of the actual income taxes to the amount of tax computed by applying the aforementioned statutory income tax rate to

pre-tax

income is as follows:


	For the years ended December 31,
	2017			2018			2019			2019
	RMB			RMB			RMB			US$
	(In millions, except for per share data)
Expected taxation at PRC statutory tax rate		5,321			6,831			(85	)		(12	)
Effect of differing tax rates in different jurisdictions		854			493			3,299			474
Non-taxable income		(913	)		(1,555	)		(419	)		(60	)
Non-deductible expenses		653			935			2,124			305
Research and development super-deduction		(905	)		(1,047	)		(1,245	)		(179	)
Effect of PRC preferential tax rates and tax holiday		(2,095	)		(2,250	)		(1,327	)		(191	)
Effect of tax rate changes on deferred taxes		7			—			9			1
Reversal of prior year’s EIT		(579	)		(616	)		(1,134	)		(163	)
PRC withholding tax		101			553			(224	)		(32	)
Addition to valuation allowance		551			1,399			950			136

Taxation for the year		2,995			4,743			1,948			279

Effective tax rate		14%			17%			(573%	)		(573%	)

Effect of preferential tax rates inside the PRC on basic earnings per Class A and Class B ordinary share		60.33			64.47			38.09			5.47

The tax effects of temporary differences that gave rise to the deferred tax balances at December 31, 2018 and 2019 are as follows:


	As of December 31,
	2018			2019			2019
	RMB			RMB			US$
	(In millions)
Deferred tax assets:
Provision for doubtful receivables		252			332			48
Accrued expenses, payroll and others		4,284			4,820			692
Fixed assets depreciation		60			151			22
Net operating loss carry-forward		1,609			1,733			249
Less: valuation allowance		(3,881	)		(4,843	)		(696	)

Deferred tax assets, net		2,324			2,193			315


	As of December 31,
	2018		2019		2019
	RMB		RMB		US$
	(In millions)
Deferred tax liabilities:
Long-lived assets arising from acquisitions		360		275		40
Withholding tax on PRC subsidiaries’ undistributed earnings		619		1,621		233
Tax on capital gains		2,778		1,159		166
Other		342		218		31

		4,099		3,273		470

As of December 31, 2019, the Company had tax losses of approximately RMB9.9 billion (US$1.4 billion) deriving from entities in the PRC, Hong Kong and Japan. The tax losses in Japan can be carried forward for

nine years

to offset future taxable profit. The tax losses in PRC can be carried forward for

five years

to offset future taxable profit, and the period was extended to 10 years for entities qualified as HNTE in 2019 and thereafter.

The tax losses of entities in the PRC and Japan will expire from

2020

to 2029. The tax losses in Hong Kong can be carried forward with no expiration date.

The Company evaluated its income tax uncertainty under ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the financial statements. The Company elects to classify interest and penalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of comprehensive income

(loss)

. As of and for the years ended December 31, 2018 and 2019, there

were

no significant impact from tax uncertaint

ies

on the Company’s financial position and result of operations. The Company does not expect the amount of unrecognized tax benefits

increase significantly in the next 12 months. In general, the PRC tax authorities have up to

five years

to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, the PRC subsidiaries’ tax years of 2014 through

2019

remain open to examination by the respective tax authorities. The Company may also be subject to the examination of the tax filings in other jurisdictions, which are not material to the consolidated financial statements.

In 2013, the Company accrued RMB581 million of

withholding

tax for the potential remittance of earnings from the PRC subsidiaries to their offshore parent companies in the form of dividend distribution, because the Company believes that the underlying dividends will be distributed in the future considering future merger and

acquisition activities. In 2019, the Company accrued RMB1.0 billion of withholding tax for the potential remittance of earnings from the PRC subsidiaries to their offshore parent companies in the form of dividend distribution. The Company did not provide for additional deferred income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries during the years presented on the basis of its intent to permanently reinvest its foreign subsidiaries’ earnings. As of December 31

2019, the total amount of undistributed earnings from the PRC subsidiaries and the VIEs for which no withholding tax has been accrued was RMB145.9 billion (US$21.0 billion). Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. Under the PRC tax regulations, dividends from PRC companies to their overseas parents on earnings derived from January 1, 2008 onwards are subject to PRC dividend withholding tax at 10%. Such rate could be reduced to 5% with applicable treaty.

This ‘20-F’ Filing

Date

Other Filings

Filed on:

3/13/20

For Period end:

12/31/19

12/31/18

20-F

12/31/17

20-F

1/1/08

List all Filings

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/15/24 Baidu, Inc. 20-F 12/31/23 159:24M Donnelley … Solutions/FA 3/22/23 Baidu, Inc. 20-F 12/31/22 164:28M Donnelley … Solutions/FA 3/28/22 Baidu, Inc. 20-F 12/31/21 168:26M Donnelley … Solutions/FA 8/19/21 Baidu, Inc. 424B2 1:1.9M Donnelley … Solutions/FA 8/16/21 Baidu, Inc. 424B5 1:1.9M Donnelley … Solutions/FA 3/09/21 Baidu, Inc. 20-F 12/31/20 166:25M Donnelley … Solutions/FA 10/07/20 Baidu, Inc. 424B2 1:820K Donnelley … Solutions/FA 10/05/20 Baidu, Inc. 424B5 1:823K Donnelley … Solutions/FA 10/05/20 Baidu, Inc. F-3ASR 10/05/20 6:465K Donnelley … Solutions/FA

Baidu, Inc. – ‘20-F’ for 12/31/19 – ‘R21’

On: Friday, 3/13/20, at 5:21pm ET · For: 12/31/19 · Accession #: 1193125-20-73092 · File #: 0-51469

Previous ‘20-F’: ‘20-F’ on 3/15/19 for 12/31/18 · Next: ‘20-F’ on 3/9/21 for 12/31/20 · Latest: ‘20-F’ on 3/15/24 for 12/31/23 · 9 References:

Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘R21’ — Income Taxes

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

9 Subsequent Filings that Reference this Filing

Baidu, Inc. – ‘20-F’ for 12/31/19 – ‘R21’

On: Friday, 3/13/20, at 5:21pm ET · For: 12/31/19 · Accession #: 1193125-20-73092 · File #: 0-51469

Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘R21’ — Income Taxes

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

9 Subsequent Filings that Reference this Filing

Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents