answers to questions related to the tax policy consultation meeting for Hong Kong businessmen (provided by the Guangdong Provincial Local Taxation Bureau) 1. How to levy personal income tax when Hong Kong people sign labor contracts and provide services separately in Hong Kong and mainland institutions (not involving directorships)? A: First of all, income from domestic sources and income from overseas sources should be distinguished:-The wages and salaries obtained by individuals during their actual work in China, whether paid by enterprises or individual employers in China or abroad, are all income from China; --Wages and salaries obtained by individuals during their actual work outside China, whether paid by enterprises or individual employers in China or abroad, belong to income from outside China. Secondly, the tax liability is determined according to the actual residence time of the individual in China (see the table below): domestic payment, part of overseas payment, part of overseas payment, part of overseas work, and general employees (senior managers) are exempted from taxation for 1 days to 183 days, part of non-domestic burden is exempted from taxation for 1 days to 1 years, and part of non-domestic burden is exempted from taxation for 1 years to 5 years. Note: Senior managers in some countries and regions are exempted from taxation for more than 5 years. Senior management refers to the positions of the company's principal and deputy (general) managers, the chief engineer, the director of various functions and the management of other similar companies in companies, enterprises and economic organizations (excluding representative offices) in China. 2. How to calculate the personal income tax payable by Hong Kong employees in China and how to deal with it reasonably? A: According to the provisions of the Notice of State Taxation Administration of The People's Republic of China on Several Issues Concerning the Implementation of Tax Agreements and Individual Income Tax Law by Individuals Without Domicile in China (Guo Shui Fa [2114] No.97): 1, Individuals who have no domicile in China but have lived in China for no more than 91 consecutive days or in China for no more than 183 consecutive days in a tax year shall be subject to the following formula: 2. The following formula applies to individuals who have no domicile in China but have lived continuously or cumulatively in China for more than 91 days in a tax year or in China for more than 183 days but less than one year during the period stipulated in the tax agreement: 3. Individuals who have no domicile in China but have lived in China for more than one year or individuals who hold corporate directors or senior management positions in China apply the following formula: 3. If there are no bills, will the subsidies for Hong Kong people working in the Mainland be regarded as income and subject to personal income tax? Answer: For the subsidies paid by enterprises to employees, if they belong to the following types, individual income tax can be temporarily exempted, and other parts should be taxed: ① Housing subsidies, food subsidies, relocation expenses and laundry expenses obtained by foreign individuals in the form of non-cash or reimbursement. ② Subsidies for domestic and overseas business trips obtained by foreign individuals according to reasonable standards. (3) The expenses for visiting relatives, language training and children's education obtained by foreign individuals are reasonable after examination and approval by the local tax authorities. 4. Since the employees of our factory in mainland China have already paid personal income tax in Hong Kong, if they have to pay personal income tax in mainland China, this is double taxation, which imposes a great burden on the company and our colleagues? A: You should distinguish your personal income tax payable in the Mainland and Hong Kong respectively according to the content of question 1. According to the Arrangement between the Mainland and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income, the amount of tax paid in Hong Kong by mainland residents from the Hong Kong Special Administrative Region is allowed to be credited against the mainland tax levied on the residents. However, the amount of credit should not exceed the amount of mainland tax calculated according to the mainland tax laws and regulations. The income earned by Hong Kong residents from the Mainland and the tax paid in the Mainland according to regulations are allowed to be credited against the tax of the Hong Kong Special Administrative Region levied on the residents. However, the amount of credit should not exceed the tax amount of the Hong Kong Special Administrative Region calculated according to the tax laws and regulations of the Hong Kong Special Administrative Region. If the taxpayer is a resident of China Mainland and Hongkong at the same time, the issue of eliminating double taxation can be resolved through consultation between the competent authorities of both sides. 5. Because our salesmen often shuttle between China and Hong Kong, in case they don't know that 183 days have passed, will our salesmen and related salesmen need to be punished? A: According to the tax law, Hong Kong compatriots are employed in the mainland, and the mainland companies are obligated to withhold and remit the wages and salaries earned by their mainland companies and Hong Kong affiliates. If it fails to declare for more than 1.83 days, the company as a withholding agent will be fined, and the individual as a taxpayer will be charged a late fee of 1.5% of the tax payable every day. Therefore, compatriots who frequently travel between China and Hong Kong should pay special attention to their residence time in the Mainland, so as to avoid being punished for unintentionally violating the provisions of the tax law. The best way to deal with this problem is that if you predict that you will live for more than 1.83 days in one year according to the employment contract, you can avoid the above-mentioned unintentional loss by reporting in accordance with the tax obligation of more than 1.83 days at the beginning. 6. If you buy a house in China for vacation, will it be considered as a place to live? A: No. A residence used for holiday in China is not a permanent residence in the sense of taxation, so it can be judged that there is a residence in China. 7. If Hong Kong residents marry their wives in China, will they be treated as China residents and pay personal income tax? A: According to the relevant provisions of the tax arrangement, as mentioned in the title, it is complicated in practice to judge whether they are tax residents in China or Hongkong, and they should be judged one by one according to the conditions of permanent residence, center of important interests, habitual residence and number of days of residence in China. If a Hong Kong resident marries and buys a house in the Mainland and has worked in the Mainland for a long time, he can basically be judged as a tax resident in China. 8. How do Hong Kong people set up self-employed households in the Mainland and how are the relevant taxes calculated? A: At present, according to CEPA, China citizens who are permanent residents of Hong Kong are allowed to set up individual industrial and commercial households in the Mainland, and their business scope includes retail, catering, hairdressing, beauty treatment, bathing and daily necessities repair. According to the relevant local tax laws, individual industrial and commercial households engaged in different industries pay different types of taxes. The local taxes involved in retail business and daily necessities repair mainly include personal income tax, stamp duty, urban real estate tax and vehicle and vessel license tax. In addition to the above-mentioned related taxes, business tax is also required for catering, hairdressing, beauty, bathing and other industries. Please refer to the information for the specific collection methods of relevant taxes. Personal income tax can be calculated in two ways: audit collection and verification collection. Five-level excess progressive tax rate table is applicable to the collection of audit: tax-included tax-included tax-included tax-included tax-included tax-excluded tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax-included tax- According to the Law of the People's Republic of China on the Administration of Tax Collection and its detailed rules and the regulations for the implementation of the Individual Income Tax Law, individual industrial and commercial households that cannot provide complete and accurate tax payment information and correctly calculate the taxable income amount are determined by the competent tax authorities to levy individual income tax by the approved collection method, including: 9. Do Hong Kong businessmen who set up factories in the Mainland but do not work permanently in the Mainland have to pay personal income tax? A: According to the provisions of State Taxation Administration of The People's Republic of China Guo Shui Fa [1996] No.214, a Hong Kong businessman who has set up a factory in the mainland is both a director (chief) and a direct management position of the enterprise, or nominally does not hold a direct management position of the enterprise, but actually engages in the daily management of the enterprise, and has the dual status of director (chief) and employee in the enterprise, regardless of whether he is resident in the mainland or not, and whether it is recorded in the enterprise account books. Except for the dividends and bonus income obtained by them, which can be exempted from personal income tax according to the relevant provisions of Guo Shui Fa [1993] No.145, the income from directors' fees obtained by them shall be subject to personal income tax according to the labor remuneration items. In addition, the income similar to wages and salaries obtained in the name of directors' fees or dividends, which is not paid in the name of wages and salaries in the enterprise, should be declared by taxpayers themselves, or the competent tax authorities should check their monthly wages and salaries with reference to the wages and salaries of similar positions in similar regions, industries and enterprises of similar scale, and levy personal income tax. 11. What are the special economic zones mentioned in the preferential income tax policies? A: Special economic zones refer to five special economic zones: Hainan Province, Shenzhen City, Zhuhai City, Shantou City and Xiamen City, Fujian Province. 11, foreign-invested enterprises, two exemptions and four halving the levy period has passed, and 111% of the products are exported. Can they apply for the policy of halving the levy? What are the application conditions? A: Yes. It must obtain the certificate of "Export Enterprise with Foreign Investment" issued by the Provincial Department of Foreign Trade and Cooperation, and then be determined after investigation by the local tax authorities. 12. Hong Kong permanent residents enjoy CEPA policy, and individual industrial and commercial households or limited companies established in the Mainland need to pay business and profits tax. Is there any difference between them? A: What tax should be paid by individual industrial and commercial households or limited companies established in the Mainland depends on the business nature of the individual households or companies. Those engaged in labor services or services are required to pay business tax, and the tax rate is 3%, 5% or 21% respectively according to the different types of labor services or services; Engaged in sales or production and processing activities, you need to pay VAT. In addition to business tax and value-added tax, it is also necessary to pay income tax according to the profitability. Self-employed individuals pay personal income tax, and limited companies pay income tax for foreign-invested enterprises and foreign enterprises. 13. When calculating urban real estate tax, should the value of land use right be regarded as tax basis? Are the local taxes in Guangzhou, Zhuhai and Dongguan consistent? Does it depend on whether the land value is included in the "fixed assets"? If it is listed as "intangible assets", it will not be levied? Is the current local policy unclear? Answer: According to the new accounting system, the price of land use right is changed from "intangible assets" to "projects under construction" and then transferred to "fixed assets", thus becoming a part of the tax basis of urban real estate tax. However, according to documentNo. [1997]162 of Guoshuihan, foreign-invested enterprises should be charged with land use fees, but not land use fees. If the price of land use right is included in the original value of real estate according to the provisions of the new accounting system, it will inevitably lead to the re-expropriation of land use right value by taxes and fees. Therefore, when calculating taxes, the price of land use right should be excluded from the original value of real estate according to the amount of land use fee paid by enterprises to the land department, and urban real estate tax should be levied only on the basis of real estate value. Because the current local tax policies have not adapted to the changes in the new accounting standards, there may be inconsistencies in the implementation of policies by the local tax authorities in Guangzhou, Zhuhai and Dongguan, and our bureau will unify and clarify them as soon as possible. 14. This enterprise has purchased a shopping mall for its own use, and the amount is RMB 11,111,111. The property tax payable is based on the property value. Is it calculated according to the whole amount (11,111,111), that is, 11,111,111× (1-31% )× 1.2%? Can you separate the whole 11,111,111 from the housing, and the property tax is only calculated according to the value of the housing? Answer: In order to prevent the value of land occupied by real estate purchased and built by foreign-invested enterprises from being expropriated by taxes and fees, foreign-invested enterprises can deduct the price of land use right from the tax basis of urban real estate tax when calculating urban real estate tax, and only calculate the tax based on the value of real estate. (See the answer to the above question for details) 15. If the domestic agent pays the fee in advance, if the customer repays the money later without additional remuneration, will business tax be levied on the money? Answer: According to the provisions of the tax law, the prepaid expenses are out-of-price expenses and should be subject to business tax. However, for enterprises engaged in property management, the total income related to property management can be deducted from the water, electricity and gas paid by the owner and the water, electricity and gas paid by the tenant, and the business tax can be paid on the balance. 16. How to levy business tax on tuition income of Chinese-foreign cooperative education? A: If the school is established with the approval of the state, students will get a nationally recognized academic certificate after graduation, and their income from educational services can be exempted from business tax. Otherwise, business tax will be paid. 17. Are Hong Kong enterprises (not permanent institutions) exempt from income tax and business tax when they provide design consulting services to domestic enterprises? Answer: 1. Engaged in consulting services. Hong Kong consulting enterprises shall pay business tax in full in the Mainland for the income from providing consulting services to mainland customers, where all the services they provide occur in the Mainland. If the services provided by it occur both at home and abroad, the domestic and overseas income shall be divided on the principle of the place where the labor service occurs, and the business tax shall be paid on the income obtained from providing services in the mainland. Under normal circumstances, in the above-mentioned consulting business, where mainland customers are served, the income from the mainland business should not be less than 61% of the total income. If all the consulting service activities are carried out overseas, the income will not be taxed. If it does not constitute a permanent establishment, no income tax will be levied. 2. Engaged in design business. Hong Kong design enterprises are entrusted by the mainland to provide design services, and their design schemes, calculations, drawings and other businesses are all carried out overseas. After the design is completed, they will hand over the drawings to the mainland enterprises, and the income from their design business will be temporarily exempted from taxation. If, after the design is completed, a staff member is sent to the Mainland to explain the drawings and give supervision, management and technical guidance to the construction of its design project, which constitutes the establishment of an institution or place in the Mainland to engage in business activities, the design business income obtained by him shall be deducted from the price of the overseas design service, and the rest shall be subject to business tax and income tax (if the overseas design service price is not specified in the entrustment contract or the supporting documents cannot be provided, and the domestic and overseas design service is correctly divided, it shall be taxed as the income from providing design service in the Mainland). If accurate cost and expense vouchers cannot be provided and the taxable income cannot be calculated correctly, the taxable income shall be calculated according to 15% of the design business income. 18, Hong Kong people set up in the mainland self-employed, how to levy income tax? A: Before there are new policies and regulations in State Taxation Administration of The People's Republic of China, the income tax of self-employed households established by Hong Kong people in the Mainland will be taxed according to the items derived from the production and operation of individual industrial and commercial households in the Individual Income Tax Law. Taxable income is the balance of the total income in each tax year after deducting costs, expenses and losses, and personal income tax is levied at the tax rate of 5%-35%.