Generally speaking, foreign enterprises have two kinds of institutions and places in China:
First, "long-term" institutions and places such as permanent representative offices and representative offices established in China by foreign enterprises approved by the relevant competent authorities in the State Council;
The other is that foreign companies and enterprises engage in contracting, construction and installation activities in China, which constitutes the establishment of institutions and places in China in accordance with the provisions of China's national tax law or Chinese-foreign tax agreements. This paper mainly introduces the general principles and regulations of personal income tax treatment of foreign companies and enterprises in institutions and places in China.
(A) the general principles of tax obligation judgment
According to the regulations for the implementation of the Individual Income Tax Law, the income obtained from providing labor services in China due to employment, employment, performance, etc. Whether the place of payment is in China or not, it belongs to the income from China and should be declared and paid personal income tax in China. Therefore, foreigners who hold positions and are employed in the representative offices of foreign enterprises in China belong to permanent residents who have fixed jobs in China, and their income from providing services in China is paid or borne by enterprises in China. Or paid by enterprises outside China, are all income from China, and should pay personal income tax in China. Income obtained by foreign individuals during their actual work outside China, whether paid by enterprises in China or enterprises outside China, belongs to income outside China. Generally speaking, there are two ways to collect and manage the personal income tax of foreigners in resident representative offices:
1. For institutions and places that collect business tax or enterprise income tax according to the facts, individual income tax can be levied according to the accounts because their accounts are clear and the income of the personnel charged is clear at a glance:
2. For institutions and places that levy enterprise income tax according to a certain proportion of turnover, or levy business tax and enterprise income tax according to the income converted from expenditure, or institutions and places that have no operating income and do not levy enterprise income tax, because their account books are untrue, the wages and salaries obtained by employees working in the institutions and places, whether recorded in the accounting books of the institutions and places, shall be regarded as paid or borne by the institutions and places, and personal income tax shall be calculated and paid on the spot.
(2) The determination of working years at home and abroad can be divided into two situations.
1. Individuals working in representative offices in China, including part-time and employed individuals, shall include public holidays, personal holidays and days of training during their work in China; The period of working in an overseas business organization and performing duties abroad or providing labor services in an overseas business place includes public holidays during this period. When verifying the period of work abroad declared by individuals, taxpayers may be required to provide certificates or other documents for sending them to work abroad.
2. Individuals who are not employed by representative offices in China, when they are sent to work in China and actually work in China, should include the holidays they enjoy in China during their work in China.
(3) Determine the source of wage income obtained at home and abroad.
Guo shui (1994)No. 148 clearly points out that the income from wages and salaries originating in China should be the income from wages and salaries obtained by individuals during their actual work in China, that is, the income from wages and salaries obtained by individuals during their actual work in China, whether paid by enterprises or individual employers in China or abroad, is the income from China, and the income from individuals outside China.
Two. Personal income tax treatment of wages and salaries earned by foreign taxpayers in different residence periods in China.
(1) Individuals who have no domicile in China and have worked continuously or cumulatively in China for no more than 90 days in a tax year, or have lived continuously or cumulatively in China for no more than 183 days within the period stipulated in the tax treaty, are exempt from reporting and paying personal income tax on wages and salaries paid by employers outside China and borne by their institutions in China.
Only the wages and salaries paid by enterprises or individual employers in China or borne by institutions in China during their actual work in China are declared and taxed. If domestic enterprises and institutions adopt the approved profit method to collect enterprise income tax, or if there is no business income, the wages and salaries actually obtained by individuals working in domestic enterprises and institutions during their work in China, whether recorded in the accounting books of domestic enterprises and institutions or not, are regarded as those paid by domestic enterprises or borne by domestic institutions.
The monthly tax payable by the above-mentioned individuals shall be declared and paid within the time limit prescribed by the tax law. Despite the principle of determining the source of income, according to international practice, non-residents living in China for a short period of time are generally given tax-free concessions for domestic income paid and borne by overseas.
For foreigners who have lived in China for less than 90 days or 183 days as stipulated in the tax treaty, their income in China is specifically divided into five different tax obligations according to the different situations of payment and burden:
The first type: the payment and burden of wages and salaries are not in China, that is, they are paid by overseas employers and are not borne by employers' institutions in China; Although according to the standards and methods for determining the source of income, the income from wages and salaries belongs to the income from China, considering his short working time in China, he is tax-free according to the international practice.
Second, wages and salaries paid in China, no matter who bears them, that is, whether they are paid by domestic enterprises or employers or by domestic or overseas enterprises or institutions, are deemed to be borne by domestic enterprises or institutions, and they are income from China, so they should fulfill their tax obligations in China.
Third, the income from wages and salaries is borne by domestic institutions, no matter who pays. It is income from China and should be taxed in China.
Fifth, it is also related to the collection of corporate income tax. For individuals who work in domestic institutions, there is no operating income and enterprise income tax is not levied. It is difficult to determine whether they will be paid and borne by domestic or overseas, and their income comes from domestic sources. Therefore, no matter who pays and bears it, it is regarded as borne by domestic enterprises and institutions, and they should fulfill their tax obligations in China.
For example, if a Japanese works in the Beijing office of a Japanese company and has worked in China for a total of 150 days, his wages and salaries during his stay in China will be paid by the Japanese company and should be handled by the following civil affairs departments to determine whether the income of the Japanese during his stay in China should be taxed in China:
1. If the firm has operating income and corporate income tax is actually levied, then Japanese income is not taxed in China.
2. If the firm has no operating income and does not levy enterprise income tax, or if it has operating income but the accounting vouchers are not perfect, the income of the Japanese shall be regarded as borne by the firm and personal income tax shall be paid in China.