- Q:
- How to calculate Income Tax for Representative Office established in Shenzhen?
- A:
- Computation of Income Tax:
- Income = Appropriation Expenditure of Current Period / (1 - Appraised and Specified Rate of Profit 10% - Sale Tax Rate 5%)
- Corporate Income Tax Payable = Profits × Appraised and Specified Rate of Profit 10% × Corporate Income Tax 25%
- Q:
- What expenses are included in the appropriation expenditure in computation of profits?
- A:
- They are : salary, bonus, allowance, welfare expenses, purchase costs of articles (including motors, office equipment and other fixed assets), communication cost, travel charge, house rent, equipment lease cost, cost of travel, entertainment expenses and other operation cost paid to employees in China and abroad.
- Q:
- Can interest income offset appropriation expenditure?
- A:
- Interest income shall not offset appropriation expenditure, and the actually accrued expenditure shall be taken in account in computing revenue before tax.
- Q:
- Can the fixed assets of Representative Office be depreciated?
- A:
- If the Representative Office has complete financial records, its fixed assets can be depreciated by the month.
- Q:
- Which expenses of Representative Office are not included in the appropriation expenditure?
- A:
-
- The airfare expenses for relevant personnel to visit parent company by invitation , it will be advanced by resident Representative Office
- Board and lodging expenses, cost of travel as well as entertainment expenses, advance d by resident Representative Office when parent company visits China by delegation
- Related expenses advanced by resident Representative Office when the head office holds large-scale exhibit in China
- Late fee and fine on various taxes payable by Representative Office
- Donations in nature of public welfare or relief used in cash by Representative Office in China
- Q:
- Shall the usage of properties owned by parent company for office address free of charge be treated as appropriation expenditure taken in account in computation of revenue before Business Tax?
- A:
- Representative Office which uses the properties owned by parent company for office address shall pay Business Tax on the basis of rent computed from the dealings between independent enterprises.
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