How To Deduct The Income Tax Paid By Taxpayers Outside China?

In accordance with the Provisional Regulations on enterprise income tax, the enterprise shall pay the enterprise income tax on its income from domestic and overseas sources.

As most countries in the world exercise the jurisdiction of the residents' tax jurisdiction and income sources, in order to avoid double taxation, China's tax law stipulates that taxpayers' tax payments abroad should be deducted when the enterprise income tax is paid in the territory.

When income tax is paid by taxpayers outside the tax collection, the following methods can be deducted when collecting the tax payment. The deduction method can not be changed arbitrarily once it is selected.

(1) no deduction is made in the country: taxpayers can provide overseas tax payment certificates in full.

The taxpayer's income tax paid abroad, including the actual tax paid by the taxpayer and the tax paid to the taxpayer, shall be provided by the taxpayer with tax certificate or tax certificate issued by the tax authorities of the country (region) and the relevant certificate of tax deduction and exemption, and the deduction amount shall be calculated according to the country (region).

The calculation formula is as follows: the foreign income tax deduction limit of the foreign trade tax is calculated as the total amount of tax payable within the territory of the country and abroad. The income tax paid by taxpayers outside the country (region) is lower than the calculated deduction of the "foreign income tax deduction limit" of the country (region), which should be deducted according to the calculated deduction limit, which can not be deducted in excess of that year, but it can be deducted from the balance of the annual tax deduction in the period not exceeding 5 years.

(2) fixed rate deduction: in order to facilitate the calculation and simplification of the collection and management, the enterprise can also make the tax exemption or non tax-free items by the application of the enterprise and the tax authorities approval, and deduct 16.5% of the taxable income abroad.

In the formula for calculating the deduction quota of overseas tax, the amount of the total tax payable within the territory and overseas income calculated according to the tax law shall be calculated according to the statutory tax rate of 33%.

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