e-commerce industry rents space from cloud platform provider to house the e-commerce
platform. Is the price paid considered as rent (leased space), royalty (platform
authorization) or a service fee (commissioned platform services)? These are the gray
areas when making judgments. The following are the areas that should be noted when
collecting cross-border fees.
Different method of taxation for different income stipulation (for example: royalty is
usually withheld in gross payment; tax on service charges will depend on the
determination if services are provided in Mainland China). Enterprises should not
only be concerned on how the tax will be imposed for the various account
receivables, they should also be concerned of the fines when they err on judgment
of tax liability.
Different taxation practice at the paying country (region) and the receiving country
(
region) will have different income stipulation for the same amount of income and
will potentially impact enterprise tax situation.
4.
Make good use of tax incentives
In recent years, Mainland China launched a variety of tax incentives which, by assessing
and using related strategies, can reduce the tax liability of the enterprises.
