Apologies if my initial forum search was too cursory to find an existing thread on this topic.
I have a registered partnership in HK and am planning to undertake a freelance contract with a mainland company. My service fee will now be subject to a 5% business tax by the Chinese tax authorities. The mainland company has agreed to compensate me for this tax, but I am confused as to the actual mechanics of paying the tax.
Some legal advice I've found on the web suggests that I can ask for a contract provision that ensures I am paid net of taxes, and that the mainland company is responsible for tax compliance. Other info suggests that, as I don't have a rep in the PRC, the mainland company automatically becomes my withholding agent anyway. I don't understand exactly what this means, however, and was wondering if anyone has had any experiences with this new tax.
Finally, what are the HK tax implications? i.e. do I pay 15% of the gross service fee or the service fee after Chinese tax - and is there a way I can structure the contract to achieve the latter?
Sorry, it's a long one! Many thanks,