Turnover Tax
Is Turnover Tax a form of VAT?
Yes, in a way. When a company provides a service, they will be taxed based on the contract sum. Different types of services attract different tax rate. Usually, it is slightly above 5%.
How about a mixed sales of goods and service provision contract?
Turnover tax and value added tax cover distinct scope. One needs only to pay for one. One do not need to split the contract into two parts and the Administration of Taxes does not welcome such a split. Hence, one should choose whether to make a contract a contract of sales or a contract of service.
Does a foreign company need to pay Turnover Tax?
Yes. A foreign company can pay turnover tax at the local Administration of Taxes of the city where service is provided. Besides paying turnover tax, corporate income tax (in the form of withholding tax has to be paid.