Profits tax-commission, rebate and discount expenses

Taxpayers will pay commissions, rebates or discounts for operating businesses. If these expenses are in compliance with the tax regulations, they are deductible if they are incurred to earn business profits. In the past, the investigation team of the Inland Revenue Department found the following situations in the expenditure of commission, rebate or discount:

• Taxpayers pay commissions, rebates or discounts to some closely related non-residents, but the taxpayers did not disclose the transactions carried out.

• In order to avoid taxation, taxpayers pay commissions, rebates or discounts to local people with close ties, but the taxpayers have not provided the recipient’s information, the relationship between the recipient and the taxpayer, sales or service details, and the commission calculation basis Wait…

• Taxpayers include commissions, rebates or discounts in the cost of purchases, and these expenses are not shown in the expense of the profit and loss account.

• Expenses for commissions, rebates or discounts that are not proven to be true are recorded in the accounts

The Inland Revenue Department believes that in all the above situations, taxpayers are actually making improper claims and therefore will consider taking punitive actions.

The above information is for reference only. If in doubt, we welcome your tax inquiries

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