The insurance company may require the insurance agent to waive certain rights in the contract and pay him a sum of money as compensation during the period of the insurance agent’s business operations. If this sum does not constitute the capital assets of the agent’s business or does not affect the overall structure of the business, it is of an operational nature rather than a capital nature and is subject to profits tax. In addition, agents should pay attention to the following points when filing taxes:
The agent receives commission income from signing an insurance policy with an insurance company by himself or his family. In fact, it belongs to his business scope, so he must also pay profits tax.
• Generally deductible operating expenses include payment of commissions and bonuses to sub-agents, payment of employee salaries and benefits, purchase of gifts for customers, entertainment expenses, etc…
• Split the expenses into business and private parts. The private part is not eligible for deduction
• Capital expenditures or capital are not deductible
• The agent remembers to keep all business records for at least seven years
The above information is for reference only. If in doubt, we welcome your tax inquiries