Economic Rights Holders in the Capacity as a Juristic Person Should Complete Business Registration and Pay Tax.

According to the latest interpretation of the Ministry of Finance, a copyright collective management organization (hereinafter “CMO”) should enter into a license agreement with the economic rights holder to act on behalf of the economic rights holder to manage copyrighted works and also to deal with license of exploitation of copyrighted works and collect royalties from the user.  A CMO shall periodically distribute royalty payments to and collect management fees from the economic rights holder for its management services.  Royalty payments should be taxable as business profit and uniform invoices should be issued therefor.

Uniform invoices should be issued (1) by the CMO to the user when it collects royalty payments from the user, and (2) by the economic rights holder in the capacity as a juristic person to the CMO when it receives royalty payments from the CMO and the invoiced amount is the royalty payment without deduction of management fees payable to the CMO.

Business registration, uniform invoices, business tax will not be required when the economic right holder is the author itself in the capacity as a natural person.  In that case, the CMO should withhold 10% tax from the royalty payments to be distributed to the economic rights holder and the royalty payments should be taxable as individual income.

Taxation on Copyright Royalty Payments
Tax Sources		Business Tax			Income Tax
		Tax Rate(%)	Time of Uniform Invoices Issuance	Business Registration
CMOs		5	Collection of royalty payments from users	P	Consolidated tax filing
Economic Rights Holders	Profiting-seeking enterprises	5	Receipt of royalty payments from CMOs	P	Consolidated tax filing
	Natural persons, but not authors	5	Receipt of royalty payments from CMOs	P	10% tax withheld for nationals’ performance of duties; 20% tax withheld for foreign nationals
	Natural persons as the authors	N.A	--	Í

(2010.07)
/CCS