Royalties: patent or know-how royalties; trademark royalties; copyright royalties; distribution rights, sales rights or other similar rights. Individuals for public welfare and relief donations within China, the portion of the donation that does not exceed 30% of the taxable income declared by the taxpayer can be deducted from his/her taxable income.
The taxable conditions of royalties: royalties are related to imported goods; the payment of royalties constitutes a condition for the sale of imported goods into the territory of the People's Republic of China.
Royalty income, refers to the enterprise to provide patents, non-patented technology, trademarks, copyrights and other concessions of the right to use the income.
Royalty income, the realization of revenue is recognized in accordance with the date of the contractual agreement of the royalty payable by the royalty licensee.
Royalty fee, can be understood as a fee charged for franchising a certain commodity or service, such as Olympic licensed goods, charging royalties, the franchisor in accordance with a certain percentage of sales to pay royalties to the Organizing Committee of the Olympic Games.
The percentage of royalties is generally 5-15% of the retail price of the goods. Royalties that are attributable to the provision of equipment and other tangible assets are recognized as revenue upon delivery of the asset or transfer of ownership of the asset.
In the case of a general taxpayer unit, the VAT rate on royalties is 6%;
In the case of a small taxpayer unit, the VAT rate on royalties is 3%;
Because of the impact of the Xinguancun epidemic, the levy rate implemented by small taxpayers outside of the Hubei region is based on 1%.
Special attention should be paid to the fact that the State Administration of Taxation (SAT), in the form of a notice (State Taxation Letter [2009] No. 507), specifies the following four types of royalties, which are not royalties:
One, it is the remuneration as after-sales service under the trade in goods alone;
Two, it is the remuneration obtained by the seller for the buyer for the services provided during the product warranty period;
Third, is specialized in engineering, management, consulting and other professional services of institutions or individuals to provide the relevant services obtained payments;
Fourth, is the State Administration of Taxation regulations of other similar remuneration.
This shows that royalties, in terms of definition, are still basically limited to various licensing income related to intellectual property rights.
(2) Application of Royalties
The Agreement provides that "as a condition of sale of the Valued Goods, the Buyer must pay, directly or indirectly, royalties relating to the Valued Goods, as long as such royalties are not included in the price paid or payable," and shall be included in the tax-paid price.
Conditions for the inclusion of royalties in the duty-paid price of imported goods:
1. Relating to the goods under appraisal:
Determining whether a royalty relates to the goods under appraisal depends primarily on the specific object of the payment, which is a relatively complex matter. We are analyzing the relationship between the goods being valued (tangible goods) and rights, information or services, etc. (intangible goods) payment, generally should grasp a basic principle, whether the importer can get tangible goods without having to buy intangible goods. If the answer is yes, it can be determined that the royalties are not related to the goods being valued, at this time they should be as far as possible separate valuation; if the answer is no, it can be determined that the royalties are related to the goods being valued.
Reproduction rights for imported goods are not related to the goods under appraisal.
2, as a condition of the sale of the assessed goods
3, the buyer pays and has not been included in the price payable
As a condition of the sale of the assessed goods:
Royalty fees must be paid as a condition of the sale of the goods being assessed, which is an important criterion for determining whether the fee is part of the duty-paid price of the goods being assessed. The sales referred to here are export sales into the importing country, so that royalties incurred by the importer in reselling the goods within the importing country after importation of the goods in question, even if they are a condition of the resale, do not form part of the duty-paid price.
Whether a royalty constitutes a condition of sale of the goods under valuation can also be judged on the basis of whether the royalty is independent of the goods under valuation. If it is not, then the fee constitutes a condition of sale and must be included in the duty-paid price.
Legal basis:
Regulations on the Implementation of the Individual Income Tax Law of the People's Republic of China
Article 14 of the Individual Income Tax Law, each of the time referred to in Article 6, paragraph 1, subparagraphs (2), (4), and (6), respectively, shall be determined in accordance with the following methods:
(1) income from remuneration for labor services and income from manuscripts, royalty income, belonging to the one-time income, to obtain the income as a time; belonging to the same item of continuous income, to obtain the income within a month as a time.
(2) Income from property leasing, the income obtained within one month as a time.
(iii) Income from interest, dividends and bonuses shall be taken as income obtained at the time of payment of interest, dividends and bonuses.
(d) Occasional income shall be taken as once each time the income is obtained.
Article 6: Scope of Individual Income under the Individual Income Tax Law:
(1) Income from wages and salaries refers to wages, salaries, bonuses, year-end raises, labor bonuses, allowances, subsidies, and other incomes derived by an individual in connection with his employment or occupation.
(2) Income from remuneration for labor services refers to the income derived by an individual from performing labor services, including those derived from designing, decorating, installing, drafting, assaying, testing, medical, legal, accounting, consulting, lecturing, translating, reviewing, painting, calligraphy, sculpting, film and television, sound recording, video recording, performing, acting, advertisement, exhibition, technical services, referral services, brokering services, agency services, as well as other labor services. income.
(3) Income from remuneration for manuscripts refers to the income obtained by an individual from the publication of his or her work in the form of books, newspapers and magazines.
(d) Royalty income, refers to the income obtained by an individual by providing the right to use patent rights, trademark rights, copyrights, non-patented technologies and other franchises; the income obtained by providing the right to use copyrights is not included in the income from manuscripts.
(E) business income, refers to: 1. Individual businessmen engaged in production, business activities to obtain income, sole proprietorship investors, partnerships, individual partners from the territory of the sole proprietorships registered in the production of enterprises, partnerships, business income; 2. Individuals engaged in the running of the school, medical care, consulting, and other paid services in accordance with the law, income; 3. Individuals of the enterprise, Individuals to enterprises, institutions, contracting, leasing and subcontracting, subletting income; 4. Individuals engaged in other production, business activities income.
(6) interest, dividends, bonuses, refers to the individual ownership of debt, equity and other interest, dividends, bonuses.
(7) Income from property leasing refers to the income obtained by an individual from the leasing of real estate, machinery and equipment, vehicles and vessels, as well as other property.
(viii) Income from transfer of property refers to the income derived from the transfer of securities, equity shares, property shares in partnerships, real estate, machinery and equipment, vehicles and vessels, and other property.
(ix) incidental income, refers to an individual to win a prize, win a prize, win a lottery and other incidental income. Individuals obtain income, it is difficult to define the taxable income items, the competent tax authorities of the State Council to determine.