Although a RO is not to conduct business, it attracts tax on
- Chief Representative, general representative and local staff's Individual Income Tax (IIT)
- Business Tax base on monthly operational expenses (BT)
- Income Tax base on annual operational expenses (IT)
IIT above depends on salary amount while BT & IT roughly amounts to 10% of annual operational expenses.
Rough elaboration on BT & IT payableBusiness Tax = Deemed Turnover x 5% Total Expenses = Deemed Turnover x 85% Deemed Turnover = Total Expenses / 85% Business Tax = (Total Expenses / 85%) x 5% Income Tax = Deemed Profit x 25% Deemed Profit = Deemed Turnover x 10% Income Tax = (Total Expenses / 85%) x 10% x 25% Business Tax + Income Tax = (Total Expenses / 85%) x (5% + 10% x 25%) Business Tax + Income Tax = (Total Expenses / 85%) x 7.5%
- Business Tax + Income Tax = Total Expenses x 8.9%