Profits Tax – Payment of Commissions, Rebates, and Discounts to be assessed by an agent

Taxpayers paying commissions, rebates or discounts need to provide a detailed table listing the information of each payee. If the taxpayer does not have or refuses to disclose the relevant information, the Inland Revenue Department will not approve the deduction of the expenses, which is in the relevant business. A compromise arrangement, but does not relieve the recipient of the obligation to report the amount for tax purposes. The Inland Revenue Department will not accept the above arrangement under the following circumstances:

• The payer pays commissions, rebates, or discounts and the business as a whole suffers a loss

• The relevant commission, rebate, or discount expense was not incurred for part of the accounting period during the basis period of assessment

• The commission, rebate, or discount expense is incurred in relation to a capital transaction

In the above cases, the payer will be regarded as the payee’s agent and be assessed for tax, or the payer needs to provide the payee’s information to the Inland Revenue Department, and the Inland Revenue Department can make tax assessments directly to the payee.

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

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