1.?Export Agency?What type of income is commission classified as?

According to the 2025 "Provisional Regulations on Value-Added Tax Implementation Rules," agency service commissions fall underModern Services - Business Support ServicesCategory. Specific characteristics include:

• Nature of Income: Intermediary Service Compensation
• Tax calculation method:
  • General taxpayers are subject to a 6% value-added tax rate.
  • Small-scale taxpayers are subject to a 3% levy rate (preferential policies for small and micro enterprises extended to 2025).
• Confirmation timing: Based on the point when the service is completed and payment is receivable.

2. What are the main taxes involved when a company receives commissions?

?Foreign trade?Agency businesses need to focus on three types of taxes and fees:

• Value - added Tax:
  • Billing Obligation: Required to issue "brokerage agency services" VAT special/ordinary invoices.
  • Declaration cycle: Monthly or quarterly declaration
• Corporate Income Tax:
  • Tax rate: 25% (small and micro enterprises can enjoy tiered preferential rates ranging from 2.5% to 15%).
  • Deductions: Relevant business costs (personnel salaries, travel expenses, etc.)
• Urban maintenance and construction tax (7% of the value - added tax amount):
  • Urban Maintenance and Construction Tax (7%/5%/1%)
  • Additional Education Fee (3%)
  • Local education surcharge (2%)

III. How is tax paid on personal foreign trade commissions?

Natural persons providing agency services should pay special attention to:

• Invoice Issuance on Behalf: A general VAT invoice must be issued by the tax authority.
• Individual Income Tax:
  • Taxed as "income from remuneration for personal services" at a rate of 20%-40%.
  • It shall be incorporated into the comprehensive income during the annual settlement and payment.
• Special circumstances: If an individual business is established, the progressive tax rates of 5%-35% for business income may apply.

IV. What are the tax risks associated with cross-border payment commissions?

Special considerations for transactions involving overseas parties:

• Withholding and remittance obligation:
  • Payment of overseas commissions requires withholding of 6% VAT.
  • Corporate income tax is withheld at a rate of 10% or the preferential tax rate under the tax treaty.
• Filing requirements:
  • A single transaction exceeding USD 50,000 requires tax filing.
  • Please provide the complete service contract and payment receipt.
• Anti-tax avoidance supervision: CRS information exchange to strengthen cross-border tax audits by 2025.

V. Common Misconceptions in Commission Tax Treatment

Five Common Mistakes to Avoid in Practice:

• Confusing commission with payment for goods and erroneously applying the 13% tax rate.
• Failure to fulfill withholding and remittance obligations for overseas payments
• Abnormal cash flow caused by cash receipts and payments.
• Failure to distinguish between domestic and foreign service content resulted in incorrect tax rate application.
• Disregard preferential treatment under tax treaties (e.g., the 7% commission tax rate under the China-Singapore Agreement).

VI. Tax Compliance Recommendations for 2025

Key operational points to ensure compliance:

• Contract Signing:
  • Specify the service content, payment method, and tax responsibility
  • Agreed invoice type and issuance time
• Account Management:
  • It is recommended to establish a dedicated foreign exchange account.
  • To prevent financial flow confusion caused by third-party collection.
• Document retention:
  • Keep complete documentation of the service process.
  • Keep original documents such as SWIFT messages for overseas payments.