FAQTax-related Issues at the Head Office in China
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When opening a new branch office in a foreign country, when filling out the "Tax Registration Form", one of the contents is "Accounting Method". There are two options for content, namely "independent accounting" and "non-independent accounting", which one should be selected? |
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If the branch is a separate accounting, independent external business, separate invoices to customers, and equipped with financial personnel, etc., you should choose "independent accounting"; if the branch is only an office and does not do separate accounting, then select "non-independent accounting".
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Is it correct to interpret that branch of "independent accounting" need to pay taxes I independently, and branches of "non-independent accounting" do not need to pay taxes independently? |
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No. The use of "independent accounting" or "non-independent accounting" for branches is a requirement for the internal management of the enterprise, not a requirement for the tax authorities. Branches, whether independently accounted for or not, are completely consistent at the level of tax management, without any difference. |
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Is the VAT of a branch office declared and paid by the branch or by the head office? |
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Under normal circumstances, it is declared and paid by branches. |
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Is the individual income tax on the wages and salaries of the employees of the branch office declared and paid by the branch office or by the head office? |
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It depends on who pays the salary. If the employee salary bonus of the branch is paid by the branch, the individual tax is declared and paid by the branch; if the employee's salary is paid directly by the head office, the head office shall withhold and pay personal income tax. |
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Do cross-provincial head offices have to apply for the filing of enterprise income tax summary tax? |
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Yes. The Announcement of the State Administration of Taxation on Printing and Distributing the Administrative Measures for the Collection and Administration of Income Tax on Enterprises Engaged in Cross-Regional Operations and Aggregates stipulates that if a resident enterprise establishes a branch office without legal personality in China that crosses regions (referring to inter-provinces, autonomous regions, municipalities directly under the Central Government and cities separately listed in the plan, the same below), the resident enterprise is a cross-regional operation summary tax-paying enterprise (hereinafter referred to as the "aggregate taxpayer enterprise"), and unless otherwise provided, its enterprise income tax collection and management shall be subject to unified calculation, hierarchical management, local prepayment, summary liquidation, and fiscal adjustment. There is no distinction between independent accounting and non-accounting. |
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As a branch, if you choose to calculate corporate income tax independently, can you not enjoy the preferential policies for small and low-profit enterprises, and can only make tax declarations at the basic tax rate of 25%? |
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Yes, if the branch does not apply for aggregate tax payment, it is not allowed to enjoy the preferential policy of small and low-profit enterprises independently and can only pay taxes at the basic tax rate of 25%. |
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Cross-regional operating enterprises were not small and micro enterprises in the previous year, and this year meets the conditions of small and micro enterprises, do secondary branches in other places still need to apportion and prepay enterprise income tax on the spot? |
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According to the Measures for the Administration of The Collection and Administration of Enterprise Income Tax for Cross-Regional Operations and Aggregate Taxation, the second-level branches of cross-regional operating enterprises that were identified as small and low-profit enterprises in the previous year do not pay enterprise income tax on the spot. This refers to the time when the small and low-profit enterprises prepay this year, if the previous year was also a small and low-profit enterprise, the second-level branches of this year cannot prepay on the spot. Therefore, whether the secondary branches of small and low-profit enterprises prepay on the spot is based on whether they are also small and low-profit enterprises in the previous year. If so, its secondary branches do not prepay in this case. |
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Is the apportionment ratio of the head office allowed to be adjusted every quarter? |
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Once the apportionment ratio of branches is determined, no adjustment will be made in the current year except for special circumstances. |
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