According to the provisions in the Notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Business Issues Related to Personal Income Tax of Employees in Law Firms [Guo Shui Fa [2000] 149] (hereinafter referred to as149), the types and ways of paying personal income tax by lawyers with different identities are different. They are now discussed as follows:
1, partner lawyer
According to document 149: "Since 2000, the annual business income of the partnership law firm has stopped collecting enterprise income tax. As a funded lawyer, personal income tax will be levied in accordance with relevant regulations and the tax item of' income from production and operation of individual industrial and commercial households'. " Specifically, based on the total annual operating income of the law firm, the income that each partner should distribute is calculated according to the proportion of capital contribution or the proportion agreed in advance, so as to collect personal income tax.
In practice, due to different conditions, such as whether the accounts are sound and whether the profits and losses can be accounted for, the tax authorities have adopted different collection methods for law firms, which has also had a great impact on the collection of lawyers' personal income tax. Now briefly described as follows:
(1) Review the collection method.
For a partnership law firm with a sound financial system, which can correctly conduct financial accounting and truthfully reflect its operating income, the individual income tax of the investors of the law firm shall be levied by means of "audit collection". "Audit collection" is a tax collection method encouraged by the state. With the gradual improvement and standardization of the national tax collection and management system and the strengthening of tax collection and management, audit collection will become the most important tax collection method. In this way, the business income or taxable income of a law firm is the balance of the total income in each tax year after deducting costs, expenses and losses, and it is the taxable income collected or calculated by accounting methods. The calculation formula is: taxable income = total income-(cost+expense+loss+allowable tax deduction). The calculation formula of individual income tax payable by each partner is: (taxable income × investment proportion or agreed proportion-expense deduction standard) × applicable tax rate-quick deduction.
(2) Approved collection methods.
For law firms that cannot accurately calculate taxable income, the tax authorities have adopted the method of verification and collection. The specific operation of the approved collection method can be divided into two types: one is the "approved collection rate" method, that is, the total income of the law firm is multiplied by the collection rate to directly calculate the personal income tax, which is adopted by Beijing, Guangzhou and other provinces, and its calculation formula is: the amount of personal income tax payable = the total income of the firm × the proportion of investment (or agreed proportion) × the collection rate.
The other is "approved taxable income rate". This collection method is to multiply the total income of the law firm by a certain taxable income rate to calculate the taxable income, and then select the applicable tax rate according to the taxable items of "income from production and operation of individual industrial and commercial households" to calculate the personal income tax. According to the document Guo Shui Fa [2002] 123, the taxable income rate shall not be less than 25%. Its calculation formula is: payable personal income tax = (total income of research institute × investment proportion (or agreed proportion) × taxable income rate-expense deduction standard stipulated by the state) × tax rate-quick deduction.
Because personal income tax is a local tax, the regulations in different provinces are different. Comparatively speaking, the first method is widely used because of its simple operation. Now take Beijing as an example to make an overview. According to the Notice of Beijing Local Taxation Bureau on Adjusting the Collection Method of Individual Income Tax for Investors in Law Firms (J.D.F. [2005] No.69), the way for partners to pay individual income tax is as follows: determine the applicable collection rate according to the cumulative operating income of law firms every quarter, calculate the tax payable, and then share the tax according to the distribution ratio agreed by investors; If the partnership agreement does not stipulate the distribution ratio, the tax shall be shared equally according to the number of partners, and the tax shall be declared separately.
Step 2 hire a lawyer
According to whether the law firm pays a fixed salary to the hired lawyer, the hired lawyer can be divided into three types:
The first category is wage lawyers. The wage lawyer receives a fixed salary from the law firm on schedule, and there is no commission income other than that. According to document 149, individual income tax is levied on the monthly income of remunerated lawyers as taxable items of "income from wages and salaries". For example, the monthly tax payable by lawyer D of W Law Firm is: (6000-1600) ×15%-125 = 535 yuan.
The second category is commission lawyers. Law firms pay commission lawyers at a fixed proportion of their monthly business income. According to the document 149 and the notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on strengthening the individual income tax collection of investors in law firms and other intermediary institutions (Guo Shui Fa [2002]123), the taxation of royalty lawyers can be divided into two situations: one is that law firms do not bear the fees for lawyers to handle cases (such as transportation, information, communication, hiring personnel, etc.). The standard for lawyers to deduct case handling fees from their income is determined by the local taxation bureaus of each province, which is generally 30% of the lawyer's income in the current month; In the second case, the lawyer's handling expenses or other personal expenses of the lawyer are reimbursed by the law firm. In this case, the handling fee of 30% will not be deducted when calculating individual tax, that is, personal income tax will be levied directly on the income.
3. part-time lawyer
When withholding personal income tax from the wages and salaries earned by part-time lawyers from law firms, the law firms will no longer deduct the expense deduction standard stipulated in the Individual Income Tax Law, and directly apply the tax rate to all the income (the balance after deducting handling fees from the income) to calculate the withholding personal income tax.
For example, the monthly tax payable by lawyer G of W Law Firm is 5000× 15%- 125 = 625 yuan, and the income tax calculation method of individual industrial and commercial households.
The income from production and operation of individual industrial and commercial households is taxable income, which is the balance of the total income from production and operation of taxpayers in each tax year after deducting the costs, expenses and losses related to their income. The taxable amount is calculated according to the five-level excess progressive tax rate.