Is the handling fee income subject to business tax and surcharge?

To pay business tax and surcharges, the fee income belongs to the service industry.

According to the Interim Regulations on Enterprise Income Tax, the handling fee for tax collection by an entity is "other income" in taxable income, and enterprise income tax and business tax should be paid. However, the state has special provisions on the handling fee of individual income tax on the interest earned from withholding and paying savings deposits. The Notice of the State Administration of Taxation on Issues Concerning the Taxation and Exemption of Individual Income Tax Handling Fee Income Derived from Withholding and Payment of Interest on Savings Deposits (Guo Shui Fa [2001] No. 31) stipulates as follows:

1. According to the provisions of the "Implementation Measures for the Collection of Individual Income Tax on Interest Income from Savings Deposits", savings institutions can obtain a handling fee of 2% of the tax withheld and paid by the savings institution. The handling fee income obtained by savings institutions shall be subject to business tax and enterprise income tax in accordance with the relevant provisions of the Provisional Regulations of the People's Republic of China on Business Tax and the Provisional Regulations of the People's Republic of China on Enterprise Income Tax.

The income from withholding interest tax handling fees obtained by tax personnel engaged in withholding and payment in savings institutions is exempt from individual income tax.

According to the above provisions, the withholding and payment of taxes by enterprises belongs to taxable services engaged in the service industry.

The Notice of the State Administration of Taxation on Issues Concerning the Levy and Exemption of Individual Income Tax Handling Income from Withholding and Paying Interest on Savings Deposits (Guo Shui Fa [2001] No. 31) stipulates that the handling fee income obtained by savings institutions shall be subject to business tax and enterprise income tax in accordance with the relevant provisions of the Provisional Regulations of the People's Republic of China on Business Tax and the Provisional Regulations of the People's Republic of China on Enterprise Income Tax.

With reference to the above provisions, we believe that the handling fee income obtained by the enterprise from withholding and paying taxes should be subject to business tax according to the service industry, and the corresponding urban construction tax and education surcharge should also be paid.

On the public channels, we have not found any clear provisions of the Yunnan Provincial Local Taxation Bureau on the issue. The following local documents are for reference:

According to the provisions of the reply of the Guangdong Provincial Local Taxation Bureau on the issue of the collection of business tax on withholding and collection and tax collection fee income (Yue Di Shui Han [2008] 583), the handling fee income obtained by units and individuals who perform the obligation of withholding and remitting, collecting and remitting taxes, or accept the entrustment of tax collection shall be levied business tax in accordance with the regulations.

Article 1 of the Letter of the Local Taxation Bureau of Guangxi Zhuang Autonomous Region on Issues Concerning the Taxation of Handling Income Obtained by Enterprises from Withholding and Paying Individual Income Tax (Gui Di Shui Han [2009] No. 446) stipulates that, in accordance with the relevant provisions of the Provisional Regulations of the People's Republic of China on Business Tax and the Notice of the State Administration of Taxation on Issues Concerning the Taxation of Individual Income Tax Fee Income Derived from Withholding and Paying Interest on Savings Deposits (Guo Shui Fa [2001] No. 31), Enterprises withholding and paying individual income tax shall pay business tax on handling fee income.

Taxes and surcharges are not expense accounts. At present, the name of the "Business Tax and Surcharge" account is adjusted to the "Tax and Surcharge" account, which accounts for the consumption tax, urban maintenance and construction tax, resource tax, education surcharge and real estate tax, land use tax, vehicle and vessel use tax, stamp duty and other related taxes and fees incurred in the business activities of enterprises.

Article 2 of the Provisions on the Accounting Treatment of Value-Added Tax (VAT) shall be adjusted to the subject of "Tax and Surcharge" after the comprehensive trial implementation of the business tax to VAT, and the subject shall be adjusted to the subject of "Tax and Surcharge", which shall account for the consumption tax, urban maintenance and construction tax, resource tax, education surcharge and real estate tax, land use tax, vehicle and vessel use tax, stamp duty and other related taxes and fees incurred in the business activities of the enterprise; In the income statement, the item of "business type tax and surcharge" is adjusted to the item of "tax and surcharge".

According to Article 1 of the Provisional Regulations of the People's Republic of China on Business Tax, entities and individuals that provide the services specified in these Regulations, transfer intangible assets or sell immovable property within the territory of the People's Republic of China are taxpayers of business tax and shall pay business tax in accordance with these Regulations.

Article 2 of the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Business Tax stipulates that the labor services specified in the Regulations in Article 1 of the Regulations refer to the labor services that fall within the scope of tax items in the transportation, construction, finance and insurance, post and telecommunications industries, culture and sports, entertainment and service industries (hereinafter referred to as "taxable services").

The tax payment of each income is as follows:

1. Profit income from non-operating income: It does not belong to the scope of business tax and does not need to pay Yingling Wu business tax.

2. Income from disposal of fixed assets of equipment: Income from disposal of fixed assets of equipment by enterprises shall be subject to business tax in accordance with Article 1 of the Business Tax Regulations on "sale of immovable property", with a tax rate of 5%.

3. Transfers of accounts payable that cannot be paid into non-operating income: This income does not belong to the scope of business tax collection and does not need to pay business tax.

4. Net income from debt restructuring: This income does not belong to the scope of business tax collection and does not need to pay business tax.

5. **Net income of subsidy: This income does not belong to the scope of business tax collection and does not need to pay business tax.

6. Net income from the exchange of non-monetary assets: For the part of the net income, there is no need to pay business tax, but for the exchange of non-monetary assets, if your enterprise involves the exchange of intangible assets or immovable property when exchanging foreign assets, it needs to pay business tax according to the above provisions according to the above provisions according to the "transfer of intangible assets" and "sale of immovable property", with a tax rate of 5%.

The income of the above situations shall be incorporated into the enterprise income tax income of the enterprise in the current year to calculate the enterprise income tax.

Taxes and surcharges include consumption tax, urban maintenance and construction tax, education surcharge, resource tax, real estate tax, urban land use tax, vehicle and vessel tax, stamp duty, etc. Dry tax refers to the tax confiscation and surcharge incurred by the enterprise except for the enterprise income tax and the allowable deduction of value-added tax.