How should our chief representative of the office pay tax in China?

The payment method is government by a number of tax rules. Generally speaking, full time chief representative without any other job titles shall pay individual income tax for all his/her global income. Part-time chief representative should pay individual income tax for his/her China-sourced income during his/her actual working period in China.

Can interest revenue offset the expenses?

No. Rep offices shall calculate income tax based on actual expenses. Interest revenue shall not offset the expenses of the current period.

As a Representative office, what kinds of taxes should we pay?

If your representative office does not fall into the category of tax exemption, following taxes are applied. a)Corporate income tax b)Business tax c)Individual income tax d)Stamp duty e)Any other taxes related to foreign companies

What is Tax Free Method?

Representative offices established by foreign governments, international organizations, not-for-profit organizations, or non-government organizations, etc., can apply for tax free method by submit application to state tax authority. Yet the application process maybe cumbersome and sufficient documents should be filed properly. Under this method, there shall be not business tax and income tax for the representative […]

What is Actual Income Method?

If a representative office can not be classified as either Actual profit method or Expense Gross-up Method and it is not qualified as a tax free office, it should do its tax filing using this method. Under this method, if the office has revenue, it should pay taxes. If not, it only needs to provide […]

What is Expense Gross-up Method?

Representative offices are taxed based on the expenses incurred instead of the income received. The tax risk for this form is relatively low. Most of the representative offices of foreign enterprises are taxed on an expense gross-up basis.

What is Actual Profit Method?

This kind of representative office should clearly record its revenue and expenses. Tax filing should be done as if it is a business enterprise.  If a representative office can meet certain requirements, for example, a law firm or an accounting firm, it may be taxed on the income actually received.