1. Relevant laws and regulations of the refund
   
   According to China Individual Income Tax Law, each income earner should be the taxpayer who is obligated to pay income tax in terms of the enterprise or individual being the withholding tax agent. A procedure fee of 2% will incur based on the amount of individual income tax withheld.
   
   
2. Purpose of Procedure Fee in Individual Income Tax and Related Taxes
   
   

   (1)

   Rewarding staff who oversee IIT Policies In accordance with Notice on Policy Issues Concerning Individual Income Tax jointly issued by Ministry of Finance and State Taxation Administration, the payment of procedure fee will be rewarded to staff who process withholding IIT, and individual income tax would be exempted. However, if the refund is paid to irrelevant staff as welfare, tax exemption is not applicable.

   (2)

   Recognized as Service Income (a)  Added-Value Tax According to China’s tax law, the procedure fee received by a company shall be recorded as service income, which incurs Added-Value Tax & Surcharges for the enterprise. (b)  Business Income Tax According to China’s tax law, the gross income refers to the monetary and non-monetary income obtained by enterprises from various sources. Therefore, enterprises shall pay business income tax that comes from the procedure fees through withholding Individual Income Tax.

   
   
3. Application Date
   
   To get paid for withholding individual income tax timely, withholding tax agent should complete the application by 30 March 2022 as stipulated by Shenzhen Tax Bureau. If the withholding agents fail to apply in time for personal reasons, an automatic waiver will occur for the previous-year procedure fees from withholding individual income tax.
   

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