4. DEEMED TURNOVER
ln case of the transaction prices of the provision of services, assignment of intangible assets and sales of immovable property is unreasonably low without a good reason, the tax authority can deem the turnover amount in the following order:
The average price of the similar services provided or the similar sales transaction conducted by the taxpayer during the current month.
The average price of the similar services provided or the similar sales transaction conducted by the taxpayer recently.
By the following formula:
Deemed turnover= Cost * (1 + deemed profit rate)/(I- applicable business tax rate)
The local tax bureau case by case determines the deemed profit rate.
@A company sold an office at RMB2 million to another company. The cost of
building the office is RMB5.5 million, deemed profit rate 15%, calculate the business
tax for the company
Since the sales of immovable property is below cost, if it is a sale at unreasonably low prices without a good reason, the tax bureau can deem the turnover by the above equation.
Deemed turnover = 5,500,000 x (1 + 15%) / (1 - 5%) = RMB6,657,894.73 Business tax = 6,657,894.73 x 5%=RMB332,894.73