Tax Planning in China - Representative Offices

Tax Planning for
Small and Medium Sized Enterprises in China

Recent Tax Changes Concerning Representative Offices

Tax Changes Concerning Representative Offices
Major changes include:
Application for Enterprise Income Tax (EIT) exemption from ROs will no longer be accepted;
Existing tax exempted ROs will be cleared up;
Business tax will be paid on actual China source income and profit tax will be paid on actual profit;
Cost plus method used for RO with inaccurate revenue records;
Actual revenue/deemed profit method used for RO without accurate expenses or cost records.

Tax Changes Concerning Representative Offices
Major changes - continued:
The minimum deemed profit rate has been increased to 15%;
15% - 30% for construction, design, consulting service;
30% - 50% for management service;
No less than 15% for other services;
Minimum tax burden has been increased from 8.8% to 10.9%.

Issues for Clarification
The following issues require further clarification from tax authorities:
If the RO is used for preparatory and auxiliary purposes, will the RO is allowed to apply for tax exemption according to tax treaty?
If so, how do you deem an RO to be for preparatory and auxiliary purposes?
How do we define China source income when an RO is not supposed not to carry out any operation in China from legal standpoint?
How will the tax officer determine the deemed profit rate?
The business tax rate for legal entities is from 3% to 20%. Will the same rate apply to ROs?

Contact Us
NCO China
tel: +86 (10) 8447 8118
fax: +86 (10) 8447 9349
e-mail: enquiry@ncochina.com
website: www.ncochina.com

Tax Planning in China - Representative Offices

by NCO China on Jan 21, 2011

Accessibility

Categories

Tags

Upload Details

Usage Rights

Statistics

Tax Planning in China - Representative Offices — Presentation Transcript