1. Taxation Formula of Representative Office (The calculation is all base on the Expense):
Sales Turnover = Expense /(1 - Contract Tax Rate);
Sales Tax = Sales Turnover × Tax Rate;
Embankment protection Fee = Sales Turnover × Tax Rate;
Total amount of income = Expense /(1 - Contract Tax Rate - Sales Tax Rate);
Income Tax = Total amount of income × Contract Tax Rate× Income Tax Rate;
Urban maintenance and construction fee =Sales Tax × 7%
Additional education tax = Sales Tax × 3%
Additional education tax of local government = Sales Tax × 2%
2. Example
Suppose the Expense is 100 RMB, calculate all the tax we need to pay:
Sales Tax:100/0.8×5% = 6.25(RMB)
Embankment protection Fee:100/0.8×0.09% =0.1125(RMB)
Urban maintenance and construction fee:6.25×7%=0.4375(RMB)
Additional education tax:6.25×3%=0.1875(RMB)
Additional education tax of local government:6.25×2%=0.125(RMB)
Income Tax:100/0.8×15%×25% =4.6875(RMB)
Total Tax:6.25+0.1125+0.4375+0.1875+0.125+4.6875=11.8(RMB)
Total amount of tax is about 11.8% of the Expense of rep-office