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Is it necessary to go through tax filing for external payment?

Views:1584Time:2019-08-19

With the implementation of one belt, one road, the demand for foreign exchange payment will increase continuously, and tax risk will increase correspondingly. In accordance with the provisions of announcement on issues related to tax filing of foreign payment of service trade and other projects (Announcement No. 40 of State Administration of Taxation, State Administration of foreign exchange, 2013, hereinafter referred to as Announcement No. 40), the author gives a correct explanation to the seven common misunderstandings of domestic institutions and individuals (hereinafter referred to as the filing person) in practice.

Error 1: as long as external payment occurs, tax filing is required

According to Article 1 of announcement 40, the following foreign exchange funds of service trade, income, current transfer and capital projects with a single payment equivalent to more than 50000 US dollars (excluding 50000 US dollars equivalent) and the following foreign exchange funds of reinvestment of more than 50000 US dollars by foreign investors in China with the legitimate income of domestic direct investment shall be handled and submitted for foreign payment of service trade and other projects Tax filing form (hereinafter referred to as "Filing Form"): first, service trade income obtained by overseas institutions or individuals from China; second, work remuneration of overseas individuals in China, as well as income and regular transfer income obtained by overseas institutions or individuals from China; Third, financial leasing rents, real estate transfer income, equity transfer income and other legitimate income of foreign investors obtained by overseas institutions or individuals from China.

For example, on November 1, 2013, according to the loan contract, resident enterprise a needs to pay 48000 US dollars of loan interest in October to non resident company B. As the payment amount is less than 50000 US dollars, company a does not need to handle and submit the filing form to the competent tax authority, and can directly handle the payment business at the designated foreign exchange bank.

Error 2: income tax must be withheld in advance as long as tax filing is handled

Correct explanation: Article 6 of Announcement No. 40 stipulates that if the information submitted by the filing person is complete and the filing form is completed, the competent state tax authority does not need to audit the tax matters on the spot, it shall prepare the serial number of the filing form, stamp on the filing form, and return one copy to the filing person on the spot Article 7 provides that after completing the tax filing procedures, the filing person shall, on the strength of the filing form sealed by the competent state tax authority, go through the examination and verification procedures of foreign exchange payment at the designated foreign exchange bank in accordance with the provisions of foreign exchange management.

For example, on May 10, 2015, upon the decision of the general meeting of shareholders, resident enterprise a paid a dividend of RMB 1 million to non resident enterprise B in 2014. On May 11, company a submitted complete filing materials and filing form to the competent tax authorities. The competent tax authority shall immediately prepare the serial number in the record form and return one copy to the record holder. On the same day, the filing person went through the procedures of foreign exchange payment at the designated foreign exchange bank with the filing form.

Mistake 3: as long as the tax record is handled, the tax risk is avoided

Correct explanation: Article 8 of Announcement No. 40 stipulates that the competent state tax authority or local tax authority shall, within 15 working days after receiving the record form, examine the record form and the attached materials submitted by the recorder, and may require the recorder to provide further relevant materials. Article 9 provides that if the competent tax authorities find that the tax payment items are not paid in accordance with the provisions, they shall inform the taxpayers or withholding agents in writing to perform the obligation of declaration and payment or withholding at the source, pursue the payment of tax in accordance with the law, and impose penalties in accordance with the relevant provisions of the tax laws and regulations.

For example, on August 1, 2015, company a, a non resident enterprise, signed an equity transfer agreement with company C, a resident enterprise, to transfer its equity in company B, a resident enterprise, to company C, which took effect on that day. On October 10, when the procedures for equity change were completed, company C submitted the filing form and other materials to the competent tax authority. On October 20, the competent tax authority reviewed the filing form and the attached materials, and found that company a did not pay the tax according to the regulations, and then issued the notice of tax matters to it, and company a finally paid the tax and overdue fine.

Error 4: no withholding of corporate income tax is required for payment items less than 50000 US dollars

Zheng Jie: according to Article 39 of the enterprise income tax law, for the income tax that should be withheld according to articles 37 and 38 of this law, if the withholding agent fails to withhold according to law or fails to perform the withholding obligation, the taxpayer shall pay it at the place where the income occurs. If a taxpayer fails to pay according to law, the tax authorities may recover the tax payable of the taxpayer from the amount payable by the payer of other income items within the territory of China.

For example, on March 5, 2016, a resident enterprise a signed a royalty agreement with a non resident enterprise B, which required us $40000 to be paid. According to Article 1 of announcement 40, although the payment amount is less than 50000 US dollars, it is not necessary to apply for tax filing, but company a still needs to deduct the income tax payable by company B according to the enterprise income tax law.

Error 5: the amount of contract signed by both parties is the basis of withholding tax calculation

Correct explanation: according to the announcement on the issues related to the payment of enterprise income tax by non resident enterprises in the pilot project of replacing business tax with value added tax (Announcement No. 9, 2013 of the State Administration of Taxation), when the non resident enterprises in the pilot project of replacing business tax with value added tax obtain the income specified in article 3.3 of the enterprise income tax law of the people's Republic of China, when calculating the payment of enterprise income tax, they shall Excluding VAT


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