Commission refers to the remuneration given by an operator to a middleman in sales business, the middleman shall be an entity or individual who are entitled to engage in intermedirary services, however, the employees shall be excluded. Commission includes agency fees, referral fees, intermediary fees, recommendation fees and brokenrage service fees.
1. Features of commission
(1)
Commission should be given to middleman only. Which cannot be neither sides of the transaction, or their agent or the handler.
(2)
The operator shall pay the commission in an explicit manner, both payer and payee shall do book-keeping accordingly.
2. Deduction ratio for CIT calculation
Enterprise shall not record the handling fee and commission as expenses of rebates, business commissions, or have the amounts deducted from the service agreement or contract directly, the deduction limit shall be calculated at 5% of the recognized revenue according to the service agreement or contract. For insurance business, the deduction limit of handling fee and commission of shall be calculated at 18% of the balance of current year’s total premium income minus surrender value, the excess part is allowed to be carried forward for deduction in subsequent years.
3. Evidence of commission payment
(1)
Sales contract or service agreement;
(2)
Commission contract or agreement (no need to provide if the commission has been agreed in the sales contract or service agreement;
(3)
Bank payment slip (cash receipt is acceptable for payment to domestic individuals);
(4)
A statement on the progress of commission payment settlement;
(5)
Statutory receipt issued by the commission payee, such as invoices ;
(6)
Qualification certificate or business license of the payee, identity certificate of individuals, etc.;
(7)
Commision calculation and distribution table, etc.
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Commission refers to the remuneration given by an operator to a middleman in sales business, the middleman shall be an entity or individual who are entitled to engage in intermedirary services, however, the employees shall be excluded. Commission includes agency fees, referral fees, intermediary fees, recommendation fees and brokenrage service fees.
According to Individual’s Income Tax Law, Industrial and Commercial Bureau shall verify the duty-paid certificate in change registration for individual’s equity transfer. Therefore, the tax payment certificate shall be obtained before the transfer of individual’s equity.
Chinese New Year is coming, enterprises usually hold an annual party to show gratitude to customers, boost employee morale, deepen internal communication and promote strategic sharing. For the annual party, certain tax-related risks such as venue leasing, employee’s reward, According to Chinese tax law, salary income includes salary, bonus, year-end salary raises, dividend, allowance, subsidy and other income incurred from employment.
According to China’s Corporate Income Tax law, enterprises shall declare related transactions in the time of submitting the annual Corporate Income Tax declaration forms if they have related transactions. Enterprises can refer to below regulations to deal with the related transactions properly.
