Small And Medium Enterprises Reduce Their Tax Burden With Bilateral Agreements

Last year, a departmental organization was surveyed in a country in Africa. More than 60% of the situation reflected by local Chinese enterprises was tax issues, most of which were small and medium-sized enterprises.

Many small and medium-sized enterprises do not know the tax agreement, nor are they good at protecting themselves by using the tax treaty legal weapon.

On the 21 day, the tax agreement "sponsored by the Chinese government network" helped Chinese enterprises to go online, and Wang Wenqin, deputy director of the international taxation department of the State Administration of Taxation, made the above remarks.

The tax risk of SMEs going out is greater.

The so-called tax agreement is the agreement reached between the two countries on how to avoid double taxation on enterprise income or property and how to prevent tax evasion.

If the two countries sign a tax agreement, the investment of enterprises will be taxed according to the tax agreement between the two countries instead of the local domestic tax law.

At present, China has signed an agreement to avoid double taxation with 99 countries, second only to the United Kingdom.

Tax treaties bring many benefits to enterprises going abroad.

For example, we should eliminate double taxation and reduce the overall tax cost of "going out" enterprises.

It can provide tax certainty for the "going out" enterprises and reduce the tax risk of pnational operation.

In addition, tax treaties can reduce the tax burden of "going out" enterprises in host countries and enhance their competitiveness.

Generally speaking, the tax agreement rate is often lower than the domestic law tax rate of the host country.

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For example, the rate of interest withholding of royalties and royalties in China's domestic law is 20%. According to the latest agreement signed by China, the withholding rate of interest is 0, and the royalty rate of royalties is 6%.

In addition, the "going out" of enterprises will inevitably happen with the tax authorities in the host country.

Tax disputes can be resolved through tax treaties.

Wang Wenqin, for example, said that a domestic company leased equipment to subsidiaries abroad, involving rental fees.

The host country did not implement the tax treaties between the two countries and taxed according to domestic law.

After the domestic company's response to the relevant departments, the two sides agreed to negotiate with the country.

And promised not to "retreat" in accordance with domestic law.

This not only solves the problem of about about 20000000 dollars in tax payment for enterprises, but also solves the problem that all Chinese enterprises are facing the backdrop of the levy.

Wen Limin, chief accountant of Dongfang Electric Group Co., Ltd., who participated in online interviews, said that the role of the tax agreement is obvious, which is reflected in low tax burden, avoidance of double taxation and certainty of tax policy.

However, Wang Wenqin said that large enterprises like Dongfang Electric appliance use tax agreements better, but SMEs are weaker.

Wang Wenqin said that large enterprises have professionals, and they also have money to ask intermediaries to understand tax treaties and know how to enjoy the agreement.

Disputes also use agreements to protect their rights and interests.

"Therefore, more than 90% of the cases that we apply for mutual consultation are large enterprises, and small and medium-sized enterprises are few. In the past two years, we have done some work in publicizing the tax agreement, and the awareness of safeguarding rights among SMEs is slowly awakening."

"Our suggestion to enterprises, especially small and medium-sized enterprises, is that overseas investment and overseas operations must pay attention to guarding against and controlling tax risks. We should understand the tax laws of the host country, abide by the laws of the host country, understand the tax agreement, enjoy the agreement treatment fully, and use the tax agreement to safeguard their rights and interests.

"Wang Wenqin said.