Three Departments Tighten Administration of Service Fees on Commissioned Withholding, Collection and Levying of Tax Payments

Recently, three departments, including the Ministry of Finance ("MOF"), have jointly issued the Circular on Further Tightening Administration of Service Fees Charged for the Commissioned Withholding, Collection and Levying of Tax Payments (the "Circular"), immediately effective from the date of issuance.

The Circular clarifies the scope in which tax payments could be withheld, collected and levied on a commission basis, administration in this regard, the rate at which service fees will be charged against tax payments, the service fee maximum, administration of service fees, etc. Among others, the Circular states that, for tax payments that could be withheld and remitted on a commission basis, as stipulated in laws and administrative regulations, tax authorities will pay service fees at the rate of up to 2% of the amount of tax payments withheld on a commission basis, and the upper limit of service fees paid to a single withholding agent is capped at CNY700,000 and the portion in excess of this upper limit will not be paid; the percentages of service fees clearly specified in laws or administrative regulations, if any, shall prevail. Furthermore, the Circular requires that, as for consumption tax on entrusted processing that shall be withheld and remitted on a commission basis, as provided by laws and administrative regulations, tax authorities will pay service fees at the rate of up to 2% of the amount of tax payments withheld on a commission basis; if the principal and the entrusted party are related parties, no service fees will be offered for the commissioned withholding.



(Source: http://xzzf.mof.gov.cn/zhengwuxinxi/zhengcefabu/201902/t20190227_3179111.html)

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