Many domestic enterprises have registered Hong Kong companies overseas. In the process of operation, Hong Kong companies often incur relevant commission expenses, some of which are paid to individuals and some are paid to companies. Can these commission expenses be deducted before tax? Let's break it down.

To be sure, the commission paid by the Hong Kong company can be deducted before tax, but the following three conditions must be met.

First, satisfy the relevance. The occurrence of such commission must be related to the company's operation. For example, someone introduces a business to a Hong Kong company, and the business is concluded, the Hong Kong company needs to pay the sales commission to the introducer according to the proportion agreed by both parties. The commission is generated for the company's sales and is related to its operation.

Second, it satisfies rationality. The proportion of commission paid should be reasonable. In the audit of a Hong Kong company, there is no clear stipulation on the proportion of commission in sales. Generally speaking, if the proportion of commission is within the normal standard of the industry in which the Hong Kong company is located, the tax bureau and accountants will accept it, but if the proportion is obviously unreasonable, it will not be accepted.

Third, satisfy the authenticity. The commission must be real, and the relevant agreement, transfer voucher, commission receipt and other evidence materials shall be provided to support the commission.

In addition to the introduction of the business mentioned above, there are other reasons for paying commission, such as providing market expansion, market research, technical support, after-sales service, etc. Different reasons require different evidence materials.

In short, the commission must prove its relevance, rationality and authenticity before it can be deducted before tax.

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