How to calculate individual income tax on labor remuneration income? - I have a disagreement with DeepSeek
2025 02/11
Next month will soon see the comprehensive income settlement and payment of individual income tax for the year 2024.After a friend consulted DeepSeek about the calculation of individual income tax on labor remuneration income and sent me the answer for verification,I found a disagreement with DeepSeek's reply regarding the confirmation of the income amount.
The reason for this lies in that the answers to some tax-related questions on the Internet are inaccurate in themselves,which in turn leads to the wrong reply from DeepSeek.So,how exactly should the individual income tax on labor remuneration be calculated?This issue is particularly important for practitioners in the cultural and entertainment industry as well as the online live streaming industry.When brokerage companies and artists divide the proceeds,it is more likely to trigger disputes regarding issues such as individual income tax withholding,value-added tax deduction,and publicity and distribution cost deduction.Today,let's focus on the problem points that are most prone to errors when calculating the individual income tax on labor remuneration.
I.DeepSeek's Calculation Error of the Income Amount
When asking DeepSeek the question,"Only one labor service contract was signed throughout the year,with an amount of 10 million yuan,and there is no other income.What is the after-tax income after the settlement and payment?"In DeepSeek's reply,"Multiply 80%of the 10 million yuan(that is,8 million yuan)by the tax rate and subtract the quick calculation deduction,then obtain the amount of individual income tax,and further calculate the after-tax income of individual income tax."As shown in the picture:
According to Article 6 of the Individual Income Tax Law,when calculating the taxable income,the balance after subtracting 60,000 yuan of expenses,special deductions,special additional deductions,other deductions determined according to law,and donations to public welfare undertakings from the income can be used as the taxable income.Therefore,DeepSeek is already wrong in not making such deductions during the calculation.
However,the biggest disagreement between me and DeepSeek is whether the value-added tax and surcharges in the contract amount should be deducted when calculating the income amount.In other words,I think DeepSeek has made an error in determining the"income amount".I believe that when calculating the income amount,the value-added tax and surcharges in the contract should be subtracted.Assuming that this is the only income for the year,how should the taxable income after the settlement and payment be calculated?The calculation method and steps should be:
(1)Calculate the amount of value-added tax and surcharges;
(2)Calculate the income amount:(Contract amount of 10 million yuan-Amount of value-added tax and surcharges)×80%=Income amount;
(3)Calculate the taxable income:Then,when entering the settlement and payment,according to Article 6 of the Individual Income Tax Law,subtract 60,000 yuan from the income amount,subtract special deductions(including basic endowment insurance,basic medical insurance,unemployment insurance and other social insurance premiums and housing provident funds paid by resident individuals within the scope and standards stipulated by the state,etc.),subtract special additional deductions(including expenses for children's education,continuing education,serious illness medical treatment,housing loan interest or housing rent,support for the elderly,etc.),subtract other deductions determined according to law(including the individual's payment of enterprise annuities and occupational annuities in line with state regulations,the individual's purchase of commercial health insurance and tax-deferred commercial endowment insurance in line with state regulations,and other items that can be deducted as stipulated by the State Council),and subtract the individual's donations to public welfare and charitable undertakings such as education,poverty alleviation,and relief.Finally,the taxable income is obtained.
(4)During the settlement and payment:Taxable income×45%-181,920=Amount of individual income tax.
(5)The after-tax income after deducting the value-added tax and individual income tax for the whole year is:Contract amount of 10 million yuan-Amount of value-added tax and surcharges-Amount of individual income tax.
II.The Income Amount of Labor Remuneration Does Not Include Value-Added Tax and Surcharges
In practice,regarding the confirmation of the income amount of labor remuneration,whether the value-added tax and surcharges in the contract amount should be deducted?Many practical workers also have misunderstandings about this.Then,let's focus on discussing why the value-added tax and surcharges should be deducted.
(1)Current laws have clearly stated that the income amount does not include value-added tax and surcharges
The Notice of the State Taxation Administration on Clarifying the Calculation Formula for the Withholding of Individual Income Tax on Labor Remuneration Income for Which a Unit or an Individual Acts as the Taxpayer(Guo Shui Fa[1996]No.161)stipulates that"where a unit or an individual bears the individual income tax for the taxpayer,the tax-free income obtained by the taxpayer should be converted into the taxable income,and the individual income tax should be calculated and levied."
Paragraph 1 of Article 3 of the Notice of the Ministry of Finance and the State Taxation Administration on the Connection of Preferential Policies after the Amendment of the Individual Income Tax Law(Cai Shui[2018]No.164)stipulates that the commission income obtained by insurance marketers and securities brokers belongs to labor remuneration income.The balance after deducting 20%of the expenses from the income excluding value-added tax is taken as the income amount.After deducting the business development costs and additional taxes and fees from the income amount,it is included in the comprehensive income of the current year,and the individual income tax is calculated and paid.The business development costs of insurance marketers and securities brokers are calculated according to 25%of the income amount.
According to the above regulations,legal documents have clearly stated that for labor remuneration income,80%of the income excluding value-added tax is taken as the income amount.Therefore,the amount excluding value-added tax and surcharges in the contract should be calculated first.
(2)Value-added tax is an extra-price tax and does not belong to labor income
The Value-Added Tax Law that will come into effect on January 1,2026 also clearly states that value-added tax is an extra-price tax.Article 7 stipulates that"Value-added tax is an extra-price tax,and the sales amount of a taxable transaction does not include the value-added tax amount.The value-added tax amount should be separately indicated on the transaction voucher in accordance with the regulations of the State Council."
Therefore,it is recommended that when signing a labor service contract,the amount of the labor service itself and the amount of value-added tax and surcharges can be agreed upon as two separate amounts.When filing the tax return for labor remuneration income tax,note that the income amount does not include value-added tax and surcharges.This point should especially be noted by practitioners in the cultural and entertainment industry and the online live streaming industry to prevent bearing excessive tax burdens due to incorrect tax filings.
(3)Multiple official tax authorities have confirmed that the income amount of labor remuneration does not include value-added tax and surcharges
I retrieved the replies from the official websites of multiple tax authorities to this question raised by taxpayers,and the answers are consistent with my above analysis.The screenshots are as follows:
Official reply from the Zhejiang Provincial Tax Service
Official reply from the Heilongjiang Provincial Tax Service
Official reply from the Fujian Provincial Tax Service
Official reply from the Xiamen Municipal Tax Service
III.When There Are Multiple Parties Dividing the Proceeds in the Cultural and Entertainment Industry,Attention Should Be Paid to Whether Value-Added Tax and Surcharges Should Be Deducted from the Income Amount
(1)When a brokerage company divides the proceeds with an artist's studio,attention should be paid to the calculation of the proceeds division amount
The rules for a brokerage company to divide the proceeds with an artist or an artist's studio often simply stipulate distribution methods such as a 50-50 split or a 30-70 split of the project contract amount after deducting the costs.For example,if an actor's remuneration for starring in a certain TV drama is 6 million yuan,when the two parties divide the proceeds based on the 6 million yuan as the base,in addition to deducting the corresponding daily expenses such as publicity and operation for the project,attention should also be paid to whether and how to deduct the value-added tax and surcharge costs corresponding to the 6 million yuan value-added tax special invoice issued by the brokerage company for the production company.
(2)When an artist divides the proceeds with a third-party partner,attention should be paid to deducting the value-added tax and surcharges from the total income
In practice,for a certain project,if an artist has a distribution agreement with a third party based on this project and the two parties agree to use the artist's after-tax income as the distribution basis.Then it should be noted that the after-tax income should be the income after deducting individual income tax,value-added tax and surcharges.This point should be specifically clarified in the contract between the two parties to prevent disputes over income distribution.
IV.Reflections
Artificial intelligence has played a role in solving daily problems for users,assisting in work,and improving office efficiency that has exceeded our imagination.If you want to make good use of this tool to solve tax problems,users need to have some understanding of tax-related professional knowledge.For example,when asking DeepSeek this time,if the user knew that"in the calculation of labor remuneration income,the value-added tax and surcharges in the contract amount should be deducted first,then there should be no problem for DeepSeek to make a simple calculation."I asked DeepSeek several common-sense tax questions,and the answers were not satisfactory.The main reason is that there is a lot of incorrect information on the Internet,which affects the judgment of artificial intelligence.Therefore,if users encounter tax problems,they should consult and confirm with professionals more often.
The reason for this lies in that the answers to some tax-related questions on the Internet are inaccurate in themselves,which in turn leads to the wrong reply from DeepSeek.So,how exactly should the individual income tax on labor remuneration be calculated?This issue is particularly important for practitioners in the cultural and entertainment industry as well as the online live streaming industry.When brokerage companies and artists divide the proceeds,it is more likely to trigger disputes regarding issues such as individual income tax withholding,value-added tax deduction,and publicity and distribution cost deduction.Today,let's focus on the problem points that are most prone to errors when calculating the individual income tax on labor remuneration.
I.DeepSeek's Calculation Error of the Income Amount
When asking DeepSeek the question,"Only one labor service contract was signed throughout the year,with an amount of 10 million yuan,and there is no other income.What is the after-tax income after the settlement and payment?"In DeepSeek's reply,"Multiply 80%of the 10 million yuan(that is,8 million yuan)by the tax rate and subtract the quick calculation deduction,then obtain the amount of individual income tax,and further calculate the after-tax income of individual income tax."As shown in the picture:
According to Article 6 of the Individual Income Tax Law,when calculating the taxable income,the balance after subtracting 60,000 yuan of expenses,special deductions,special additional deductions,other deductions determined according to law,and donations to public welfare undertakings from the income can be used as the taxable income.Therefore,DeepSeek is already wrong in not making such deductions during the calculation.
However,the biggest disagreement between me and DeepSeek is whether the value-added tax and surcharges in the contract amount should be deducted when calculating the income amount.In other words,I think DeepSeek has made an error in determining the"income amount".I believe that when calculating the income amount,the value-added tax and surcharges in the contract should be subtracted.Assuming that this is the only income for the year,how should the taxable income after the settlement and payment be calculated?The calculation method and steps should be:
(1)Calculate the amount of value-added tax and surcharges;
(2)Calculate the income amount:(Contract amount of 10 million yuan-Amount of value-added tax and surcharges)×80%=Income amount;
(3)Calculate the taxable income:Then,when entering the settlement and payment,according to Article 6 of the Individual Income Tax Law,subtract 60,000 yuan from the income amount,subtract special deductions(including basic endowment insurance,basic medical insurance,unemployment insurance and other social insurance premiums and housing provident funds paid by resident individuals within the scope and standards stipulated by the state,etc.),subtract special additional deductions(including expenses for children's education,continuing education,serious illness medical treatment,housing loan interest or housing rent,support for the elderly,etc.),subtract other deductions determined according to law(including the individual's payment of enterprise annuities and occupational annuities in line with state regulations,the individual's purchase of commercial health insurance and tax-deferred commercial endowment insurance in line with state regulations,and other items that can be deducted as stipulated by the State Council),and subtract the individual's donations to public welfare and charitable undertakings such as education,poverty alleviation,and relief.Finally,the taxable income is obtained.
(4)During the settlement and payment:Taxable income×45%-181,920=Amount of individual income tax.
(5)The after-tax income after deducting the value-added tax and individual income tax for the whole year is:Contract amount of 10 million yuan-Amount of value-added tax and surcharges-Amount of individual income tax.
II.The Income Amount of Labor Remuneration Does Not Include Value-Added Tax and Surcharges
In practice,regarding the confirmation of the income amount of labor remuneration,whether the value-added tax and surcharges in the contract amount should be deducted?Many practical workers also have misunderstandings about this.Then,let's focus on discussing why the value-added tax and surcharges should be deducted.
(1)Current laws have clearly stated that the income amount does not include value-added tax and surcharges
The Notice of the State Taxation Administration on Clarifying the Calculation Formula for the Withholding of Individual Income Tax on Labor Remuneration Income for Which a Unit or an Individual Acts as the Taxpayer(Guo Shui Fa[1996]No.161)stipulates that"where a unit or an individual bears the individual income tax for the taxpayer,the tax-free income obtained by the taxpayer should be converted into the taxable income,and the individual income tax should be calculated and levied."
Paragraph 1 of Article 3 of the Notice of the Ministry of Finance and the State Taxation Administration on the Connection of Preferential Policies after the Amendment of the Individual Income Tax Law(Cai Shui[2018]No.164)stipulates that the commission income obtained by insurance marketers and securities brokers belongs to labor remuneration income.The balance after deducting 20%of the expenses from the income excluding value-added tax is taken as the income amount.After deducting the business development costs and additional taxes and fees from the income amount,it is included in the comprehensive income of the current year,and the individual income tax is calculated and paid.The business development costs of insurance marketers and securities brokers are calculated according to 25%of the income amount.
According to the above regulations,legal documents have clearly stated that for labor remuneration income,80%of the income excluding value-added tax is taken as the income amount.Therefore,the amount excluding value-added tax and surcharges in the contract should be calculated first.
(2)Value-added tax is an extra-price tax and does not belong to labor income
The Value-Added Tax Law that will come into effect on January 1,2026 also clearly states that value-added tax is an extra-price tax.Article 7 stipulates that"Value-added tax is an extra-price tax,and the sales amount of a taxable transaction does not include the value-added tax amount.The value-added tax amount should be separately indicated on the transaction voucher in accordance with the regulations of the State Council."
Therefore,it is recommended that when signing a labor service contract,the amount of the labor service itself and the amount of value-added tax and surcharges can be agreed upon as two separate amounts.When filing the tax return for labor remuneration income tax,note that the income amount does not include value-added tax and surcharges.This point should especially be noted by practitioners in the cultural and entertainment industry and the online live streaming industry to prevent bearing excessive tax burdens due to incorrect tax filings.
(3)Multiple official tax authorities have confirmed that the income amount of labor remuneration does not include value-added tax and surcharges
I retrieved the replies from the official websites of multiple tax authorities to this question raised by taxpayers,and the answers are consistent with my above analysis.The screenshots are as follows:
Official reply from the Zhejiang Provincial Tax Service
Official reply from the Heilongjiang Provincial Tax Service
Official reply from the Fujian Provincial Tax Service
Official reply from the Xiamen Municipal Tax Service
III.When There Are Multiple Parties Dividing the Proceeds in the Cultural and Entertainment Industry,Attention Should Be Paid to Whether Value-Added Tax and Surcharges Should Be Deducted from the Income Amount
(1)When a brokerage company divides the proceeds with an artist's studio,attention should be paid to the calculation of the proceeds division amount
The rules for a brokerage company to divide the proceeds with an artist or an artist's studio often simply stipulate distribution methods such as a 50-50 split or a 30-70 split of the project contract amount after deducting the costs.For example,if an actor's remuneration for starring in a certain TV drama is 6 million yuan,when the two parties divide the proceeds based on the 6 million yuan as the base,in addition to deducting the corresponding daily expenses such as publicity and operation for the project,attention should also be paid to whether and how to deduct the value-added tax and surcharge costs corresponding to the 6 million yuan value-added tax special invoice issued by the brokerage company for the production company.
(2)When an artist divides the proceeds with a third-party partner,attention should be paid to deducting the value-added tax and surcharges from the total income
In practice,for a certain project,if an artist has a distribution agreement with a third party based on this project and the two parties agree to use the artist's after-tax income as the distribution basis.Then it should be noted that the after-tax income should be the income after deducting individual income tax,value-added tax and surcharges.This point should be specifically clarified in the contract between the two parties to prevent disputes over income distribution.
IV.Reflections
Artificial intelligence has played a role in solving daily problems for users,assisting in work,and improving office efficiency that has exceeded our imagination.If you want to make good use of this tool to solve tax problems,users need to have some understanding of tax-related professional knowledge.For example,when asking DeepSeek this time,if the user knew that"in the calculation of labor remuneration income,the value-added tax and surcharges in the contract amount should be deducted first,then there should be no problem for DeepSeek to make a simple calculation."I asked DeepSeek several common-sense tax questions,and the answers were not satisfactory.The main reason is that there is a lot of incorrect information on the Internet,which affects the judgment of artificial intelligence.Therefore,if users encounter tax problems,they should consult and confirm with professionals more often.
Previous：The box office of Ne Zha 2: The Demon Boy Makes Havoc in the Sea is a huge success. Let's talk about the profit-sharing rules and legal risks of Chinese movie box office.
Next：Deep Dive into the Seven Key Points of the New Regulations: The Implementing Measures for Company Registration Management Supporting the New Company Law Take Effect Today
Related recommendations
- The Copyright Distribution Model and Key Compliance Points in the 10-billion-yuan Short Drama Market
- When an employee's labor relationship is transferred, does the original employer need to pay economic compensation?
- What Shareholders Must Know! A Guide to the Exercise Procedures of Shareholders' Right to Know and Judicial Remedies
- The Legal Secrets Behind the Box Office of "Ne Zha" Exceeding Ten Billion Yuan: How Does IP Protection Contribute to the Myth in the History of Cinema?
