Tax on commission payment

[bobcr]

Hi
I am selling some products from a Chinese company and have a signed non exclusive agents agreement with them. I did a deal for a direct delivery to a customer where my profit was added to the price and the whole amount collected from my customer with the prior agreement my profit would be paid back to me by the Chinese supplier once they were paid.
That all took place ok and now the Chinese company is saying that before payment of this profit or commission as they describe it they have to deduct
Chinese tax as below
As you know, In China there are some legal rules about personal commission:

1.there will be 20% personal income tax if the total commission is less than CNY20,000.
2.there will be 30% personal income tax if the total commission is more than CNY20,000 but less than CNY50,000.
3.there will be 40% persoanl income tax if the total commission is more than CNY50,000.

I am fairly sure this is BS designed to cheat me out of some of the payment and would appreciate any advice
Bob

 

[MOIC]

1) Do you have a contract with the Chinese company?
2) Does the agreement mention tax to be deducted?
3) Generally speaking you have earned the commission, and its actually for you to pay the taxes earned in your country where you are declaring your income/profits ( which I presume is UK )

My advice is to take the money they are offering, as you won't win fighting with them, and increase your commission for the next deals to cover any taxes they claim they have to pay their end.

Presumably they will appreciate you getting more orders for the company and will agree to your reasonable request.

Don't leave anything 'open' when agreeing 'deals' with Chinese factories.

We live and learn

Good luck

 

[captaincloser]

This is 'witholding tax' and may well be applicable. Have a look at this article (from late 2010) which partially explains the situation though the witholding tax rates you have been given seem to be BS ?

http://www.china-briefing.com/news/2010/09/22/withholding-tax-in-china.html

I would take the money offered and have the next stock sent to yourself before paying and then complain !

 

[bobcr]

Yes we have a contract and with no mention of any tax or deductions.
I have read about the withholding tax but that wouldn't seem to be relevant as I am not proving the Chinese company a service or generating any income in China, the money was generated in the UK only.
Maybe I should get an opinion from a Chinese accountant or tax adviser.

 

[simonliu]

工資、薪金所得適用的累進稅率
級數​

全月應課稅入息實額 (應評稅入息減去扣除及免稅&#38989

稅率(%)
1​

不超過人民幣1,500元的

3
2​

超過人民幣1,500元～4,500元的部分

10
3​

超過人民幣4,500元～9,000元的部分

20
4​

超過人民幣9,000元～35,000元的部分

25
5​

超過人民幣35,000元～55,000元的部分

30
6​

超過人民幣55,000元～80,000元的部分

35
7​

超過人民幣80,000元

45​

see the update tax rate at different level.