I may need someone knowing about accounting to answer this for me:

On the contract,the show fee I should pay to a artist is$10,000. 20%($2,000) goes as withholding tax and 80% ($8,000)goes as the exact transfer amount received .

under this circumstance,the note I put behind the show fee($10,000) should be "tax-inclusive" or "tax-exclusive"?

Thanks again!

  • What country? In the US I do not think we say "tax-exclusive" at all.
    – GEdgar
    Nov 28 '15 at 23:04

Tax rates can be presented differently due to differing definitions of tax base, which can make comparisons between tax systems confusing.

In a tax-exclusive base, the tax rate is $2000/$8000 = 25%, whilst in tax-inclusive base, the rate is $2000/$10000 = 20%.

Therefore, the $10000 are tax-inclusive (or inclusive of all taxes).

The $8000 are tax-exclusive, but according to the official base of 20%, such wording should be avoided in the order or invoice.

  • @Sandy - In case of withholding tax, you should mention "Witholding tax" and tax rate (20%) in order to avoid any misunderstanding on the amount of the final payment of $8000.
    – Graffito
    Nov 29 '15 at 12:04

I will use Google's dictionary here.

     2. (of income, profit, or interest) without deduction of 
        tax or other contributions; total.

Thus the $10,000 fee before tax is the gross fee.

Now Merriam-Webster:

     1. free from all charges or deductions: as
       a. remaining after the deduction of all charges, outlay, 
          or loss <net earnings> <net worth> — compare gross

Thus after the deduction of taxes we are left with $8,000, the net fee.


If you're unsure, then the other party/ies may also be unsure. Why not just spell out exactly what you mean? There's no benefit to being pseudo-legalistic when plain English can do the job. The fee is $10000, 20% of which will be withheld for taxes, leaving a net payment of $8000.

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