China Clarifies Taxation of Directors Fees

The State Administration of Taxation (SAT) afresh appear the Circular on Clarifying Several Policy Implementation Issues of Individual Income Tax. One above affair discussed was the taxation of director’s fees.

The Circular provides that tax accumulating of administrator fee as accomplishment of claimed account is alone applicative to those affairs area individuals accept the positions of administrator or supervisor, and are not active by the company. Individuals who are advisers of the aggregation (including affiliated company) and who accordingly accept the posts of administrator or administrator shall pay alone assets tax on the accumulated assets of administrator fee, administrator fee and bacon at the tax amount for assets from accomplishment and salaries.

Scott Garner of Lehman, Lee & Xu commented that “this action change could potentially accept a cogent appulse on the taxation of director’s fees in China. Under China’s alone assets tax law, individuals book their tax allotment and pay assets tax on a account basis. Also, China’s tax ante are accelerating based on a account assets level. Under the old policy, a admiral fee would be burdened after attention to the Directors added income. Under the new system, if a Director is aswell an agent of the income, the Director/Employee will be burdened at accelerating ante on the accumulated bacon and director’s fee. This could potentially access the tax paid by advisers who aswell serve as directors.”

Lehman, Lee & Xu is a arresting Chinese accumulated law close and brand and apparent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The close is accustomed as a arch able in accumulated law and an breath affiliate of the Shanghai community.

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