FAQ about Foreign Representative Office

1) Q：

How to calculate Profits Taxfor Representative Office established in Shenzhen?

A：

Computation of Profits Tax:

2) Q：

What expenses are included in the appropriation expenditure in computation of profits?

A：

Included are : salary, bonus, allowance, welfare expenses, purchase costs of articles (including motors, office equipment and other fixed assets), communication cost, travel charge, house rent, equipment lease cost, cost of travel, entertainment expenses and other operation cost paid to employees in Chinaand abroad.

3) Q：

Can interest income offset appropriation expenditure?

A：

Interest income shall not offset appropriation expenditure, and the actually accrued expenditure shall be taken in account in computing revenue before tax.

4) Q：

Can the fixed assets of Representative Office be depreciated?

A：

If the Representative Office has complete financial records, its fixed assets can be depreciated by the month.

5) Q：

Which expenses of Representative Office are not included in the appropriation expenditure?

A：

Expenses including:

6) Q：

Shall the use of properties owned by parent companyfor office address free of charge be treated as appropriation expenditure taken in account in computation of revenue before Business Tax?

A：

Representative Office which uses the properties owned by parent companyfor office address shall pay Business Tax on the basis of rent computed from the dealings between independent enterprises.