Personal Income Tax in China

Disclaimer: Tax in China is like many other things. It is a blur concept, and confusing most of time. I am not a professional on this. To be honest, if I were not to prepare this article, I never really understand or try to understand how tax works. So there may be error or misunderstanding in this document. Refer to official document instead of this person.

Personal Income Tax

The current income tax was deducted before you get your salary. The company is responsible to charge you tax on your behalf.

The formula is

$$$ due to tax = your monthly salary – basic tax waive $ – personal social insurances etc

* basic tax waive $ is typically from 800 RMB to 1600 RMB depending on the province/city you are in. That means, if your salary is lower than this amount, you don’t have to pay tax.

* personal social insurances are different kinds of insurance you pay to the government, like housing allowance, retirement insurance, medical insurances, unemployment insurance. To be short, there are many insurances that you need to pay the government. For the company, they also need to pay the company’s portion of the same insurance for you, which is typically 45-48% of your salary.

Tax = $$$ due to tax * Tax Percentage – Easy Deduction Rate

* Easy Deduction Rate: It is just for easiness of calculation. For example, if you way a rate of 25%, there is a portion (below 20,000) that is due to lower rate (20%, 15%, 10% and 5%), so you don’t need to pay as much as 25% of the full amount, so you deduct the Easy Deduction Rate.

Tax Grade

Grade | Monthly Salary (RMB) | Tax Percentage | Easy Deduction Rate

1 | $ < 500 | 5% | 0 2 | 500 < $ < 2,000 | 10% | 25 3 | 2,000 < $ < 5,000 | 15% | 125 4 | 5,000 < $ < 20,000 | 20% | 375 5 | 20,000 < $ < 40,000 | 25% | 1375 6 | 40,000 < $ < 60,000 | 30% | 3375 7 | 60,000 < $ < 80,000 | 35% | 6375 8 | 80,000 < $ < 100,000 | 40% | 10375 9 | $ > 100,000 | 45% | 15375

Consuming Tax

When you buy goods, you are paying consuming tax, but it is included in the final price everywhere. You have no idea about that you are actually paying tax.

Self-claim tax for annual salary > 120K

There is a new policy that people with income > 120K will need to claim tax by themselves. I never really understand what it means. Let’s wait and see how it works.

50 thoughts on “Personal Income Tax in China

  1. stephen

    Oh dear, almost every incomers are subject to taxation in China, the inland revenue must hire an army of tax collectors to the task.

  2. Bryan

    A question: before paying the tax rate, what percentage of your salary is already going to pay these insurances to the government. I see that you state the company portion is typcially 45-48%, but what is the percent that a worker has to pay personally? Very interesting stuff, thanks!

  3. DC

    I am curious about the Self-claim tax for annual salary > 120K too. Please keep me update on this since I couldn’t find much information about this in English. Thanks.

  4. Давид

    Thank you for answering my question.

    What’s the new rule regarding 120k? Is there going to be a higher tax rate?

    The tax rate on RMB 120k per year (or 10k per month) is 20% for now. What’s the new rate?

  5. limin

    It will be great if someone can point out the tax structures for foreigners working in China. For whatever reasons, I thought it is still the same structure, but higher deductions. is easy deduction rate still applicable to foreigners?

  6. carsten

    Limin, so far no one have been able to explain this.

    For foreigners employed by chinese companies there are specific rules, as for the citizens.

    But if you are a foreigner, employed in foreign companies located outside of China to provide assistance to chinese companies or local branches of the same company, it has never been considered a problem, as the tax is claimed in the foreign country, no matter how low or high that actually is.

    In my company noone with employment base outside of China has ever been taxed. (It would be quite difficult too, just think of the language barrier…)

    ATTENTION :

    If anyone has been working in China for a longer period, employed by an “outside of China” located company, and has been liable to taxation, I (and certainly many others) would be very interested to hear more !

  7. biogirl

    To Bryan,

    As far as I am concerned, I need to pay 21% of my salary to cover the insurance.

    Biogirl

  8. Yong SHeng

    Hi,

    I am a little confused. Do you mean that foreginers, no matter how long you work in China, you are only taxed in your home country?

  9. mcgjcn

    foreigners working in China for more than 180 days per year would be required to pay tax in China

    in our company, all the expats are paying tax in Shanghai, while they get their salary paid from Europe

  10. Patricia

    I just started working in a Chinese company last week and I still do not get the tax thing. So if I am making 15,000RMB how much will I pay?

  11. Jommy

    Hello, I seem to have the similar case here… I pay my tax back in my country. do I still have to pay for China Income if I have stay more than 1 year?

    Jommy

    Limin, so far no one have been able to explain this.

    For foreigners employed by chinese companies there are specific rules, as for the citizens.

    But if you are a foreigner, employed in foreign companies located outside of China to provide assistance to chinese companies or local branches of the same company, it has never been considered a problem, as the tax is claimed in the foreign country, no matter how low or high that actually is.

    In my company noone with employment base outside of China has ever been taxed. (It would be quite difficult too, just think of the language barrier…)

    ATTENTION :

    If anyone has been working in China for a longer period, employed by an “outside of China” located company, and has been liable to taxation, I (and certainly many others) would be very interested to hear more !

  12. Eugene

    [HELP]

    I heard there could be a once off application to waive off the income tax for a particular month (for non-local employee), so that special bonus or relocation fees etc can in effect be tax-free. Has anyone heard of this?

    (I had a Kijiji T-Shirt from you, remember?)

  13. Eugene

    Thanks JianShuo … I checked with HR, such discount tax (not waive) applies to Annual Bonus (13th month), which will not be taxed as normal income… Cheers.

  14. Ambrose

    Hi everybody,

    I was told by a consultant saying that;

    foreigner working in China is divided by 2 categories.

    a) non-resident b) resident

    Non-resident means you have not buy any property in China,i.e house

    Resident means you have bought a property and your name has appear in the title deed.

    For non-resident,

    1) stay in China, work less than or equal 90days a year, you need to declare your China income tax (salary pay in China)

    2) stay in china, work more than 90days, less than a year, you need to declare China and foreign country income which is related to your working income (salary pay in China and in foreign land, China’s dividen, shares profit…)

    3) stay less than or equal to 183 days, you need to declare your China income tax (salary pay in China)

    4)stay more than 183 days, less than a year, you need to declare China and foreign country income which is related to your working income (salary pay in China and in foreign land, China’s dividen, shares profit…)

    5) stay more than a year, and less than or equal to 5 years, need to declare all income in China (salary pay in China and in foreign land, China’s dividen, shares profit…and foreign land income)

    6) stay more than 5 years, need to declare all income in China (salary pay in China and in foreign land, China’s dividen, shares profit…and foreign land income) After the 6 years, all income you have ( in China and in foreign land) are all taxable.

    For Resident

    Need to declare everything. Both in China and in foreign land.

    Try to use other name on your behalf in foreign land, then you need not to declare that amount.

    120K declaration is for their references and store into their data base. There will be a 20% random check in later part………may god bless us !!!!!!

    Hahaha…..just declare what you know, it will not harm you much.

    Your friendly Neigbourhood………..

    Hope this will help all of you.

  15. vnkm23

    Hello,

    Can anyone tell me what is the amount of tax i have to pay

    if i get an annual salary of 180000 CNY. Please give me an

    approximate amount that i have to pay as tax on this

    salary.

    Regards

    vnkm23

  16. carsten

    Can anyone provide a link to the official regulations IN ENGLISH ?

    Not a lawyer or HR company, but the real thing.

  17. YY

    Hi All,

    Can anyone share with me th info…

    i m holding F visa to travel to China ( for short term stay business purpose), less than 60 days in a yr. Should i declare my income for that short period work in china?

    Thnks a lot

    YY

  18. martin

    Hello,

    Can anyone tell me what is the amount of tax i have to pay

    if i get an annual salary of 180000 CNY. Please give me an

    approximate amount that i have to pay as tax on this

    salary.

    Regards

    vnkm23

    Posted by: vnkm23 on April 1, 2007 01:35 PM

    180,000CNY multiples 45% then minus 15375CNY which makes 65625CNY according the formula posted above.

  19. jmb

    Can someone tell me how much personal tax i will have to pay if i work in china as foreigner & if i get 50000 rmb per month. I will work more than one year but less than four years. Let me know i will have to pay tax if i leave company after four years ? company is not chinese owned.

  20. sheena

    i’m so confused. i just started work here yesterday as a foreigner. i wonder when will i finally und how the system works here. good luck to me in beijing!

  21. snoopy

    i earn a salary of RMB5,000 per month and an travelling allowance of RMB5,000 per month, should i declare tax? what is the calculation if i’m resident and non-resident?

  22. DCH

    What on earth is this whole tax thing! I don’t understand anything and yet I have to write a report about it 4 my English project. So if anyone is kind enough, Can u help me? im stuck.. Thanks…

  23. Rainbow

    Please tell me the tax break down for USD $334,000.00 per year. Resides in Shanghai and is Very, Very, Very important Thank you so much, your help is greatly appreciated, you will never know. Will check daily for your answer.

  24. GoGo

    I am at the crossroad in considering to join a foreign comany in Shanghai and I am a foreigner. Appreciative if someone could provide me a comprehensive calculation if I am earning RMB30,000 a month. The final $$$ is an important factor for my decision making. Someone please HELP!!!

  25. Richard

    Any one can help me to calculate the gross salaries for workers. I made a mistake by calculating from the net salary the insurances, social personal income tax etc.

    A: 3000 Rmb

    b: 3300Rmb

    c: 5500

    D: 7000

  26. Max

    The Chinese Individual Tax states foreigners must declarer and pay Chinese taxes on their worldly income after 5 years of residence in PRC.

    My question: how is ‘residence’ defined. Is it from the tax year when one had one’s first Z visa? Or does residence start when one gets an F visa? In 2003 I only had F visas. But in 2004 I started getting the Z visa. Thanks for any input.

  27. vhinx

    ….is bonus taxable in china (of course in china) like a 13th month pay??…..please, can anyone give me a quick reply?? thanks!

  28. SURENDRA JAIN

    What amount of tax I have to pay if my salary is 6300 U.S. Dollars per month and I am non resident in china and work at Tanggu

  29. Sandeep

    I’m Foreigner here in China working as a English Teacher so,How much Tax i have to pay if my salary is 4500 and please tell me the detail criteria that the foreigner should be pay…

    thank you

    Sincerely

    Sandeep

  30. DB

    Some of the above information has become outdated. For instance, the basic tax waive amount has been raised in Mar 08 to 2,000 RMB in all major cities, and amid the current crisis, it is planned to raise it further to 3,000 RMB. In addition to that, we also need to deduct the 四金 (four funds) to calculate the taxable income.

    What I still don’t understand:

    1. I’ve heard that certain allowances are tax-deductible such as housing. However, some sources say that housing is only tax-deductible if the company pays the rent directly to the landlord. If the employee pays his rent and gets the full amount reimbursed, the housing allowance is not(!) tax-deductible. Can anybody clarify this?

    2. Referring to vhinx’ question above: Some sources say that bonuses are tax-exempt, others say they’re not. What is correct? Does tax-exemption depend on certain conditions (local/foreign, amount below/above certain threshold, …)?

  31. Travis White

    I may be going to work in China and they said I would have to pay taxes. Would I have to pay both us and china taxes?

  32. Charles

    Greetings,

    I will soon move to Shenzhen for a long-term contracted job in the Futian District. Does anyone here know where can I find an apartment to rent? Many thanks in advance.

    Best,

    Charles

  33. Richard

    Hi, anyone can help as i will be working in Jiansu soon and planning to declare a monthly salary of not more than Rmb15k per month. is there a min salary guideline for a foreigner to obtain a work permit in China? Thanks in advance

  34. Neville

    Hi, I have just started working for a PR China company, but I’m working remotely (i.e. not in China.) I don’t have a work permit for China, and therefore I assume I don’t have a tax ID etc. However, the company are retaining 45% of my monthly earnings due to personal income tax – is this correct???

  35. Michelle

    Is this the right rates? It’s way too high for a developing country. Totally unreasonable to expect someone earning less that 1000 yuan to pay tax. The 45% rate for people earning above 100k is also ridiculous. If you are in Australia, you have to earn AUD 500,000,000 to pay at the highest rate, 45%.

  36. Anouk

    Hi,

    I applied for a position in china. I would like to know how much income tax will I pay if I would earn around $4000 a month during 12 months contract.

    Request info in English. thanks.

  37. sumith almeda

    Dear sir

    pls explen to me what is the peoceduer take a withholding tax clearance certificate

  38. Kevin Chen

    Can anyone provide any standard deduction for China Tax?Such as like any dependents deduction(children/wife) for foreighner

  39. Chris

    Dear sir

    Can you tell me what I need to do as a working foreigner in China to pay my tax? Where do I go to pay my tax, how does it work?

  40. Yanmei

    Please can you help me structure salary structure for someone whose gross salary is 3500RMB?? (including social security insurance to be paid by employer)

  41. Sibyl

    A question, My total earing is 3500RMB( basic salary 2000RMB, food and house allowrance 930RMB, overtime pay 570RMB), How much should I pay for individual income tax?(the threshole of personal income tax is 2000RMB).Thank you very much

  42. Tom

    I’ve been reading through this forum and still not sure if I fully understand my companies, (my) obligation.

    I work for a USA based company, my company has a JV in China, I’ve been working at this JV for approx. 181 days this year. My salary is paid through the USA company. It’s like I travel to China stay for about 4 – 8 weeks, return to the USA for a few weeks and start the process over again.

    I was told I need to pay a Chinese income tax and in order to return to China I need a China work visa and China work permit.

    Please explain, Thanks

  43. Albert

    I plan to move to china to work and base there , i have a few questions for income tax enquiry .

    1) Is it i still need to report up or pay any income tax during back to my hometown, Malaysia after complete the job contract.

    2) How to calculate the net income tax need to pay as foreigner if monthly base salary : RMB 45000

    3) Got any other intrinsic cost that i need to pay for income tax.

    4) As the foreigner, what item/cost can be used to reduce my net income tax at china.

    5) What is the income tax table need to be pay by foreigner ?

    6) Please advice, any good website that can act as reference for me, on how to calculate the net income tax.

    Thanks in advance..

  44. Mr Dwee

    I am the foreigner and will work in China Company. Can you please advise how much income tax will need to pay for the total monthly income as RMB16,000?

    Thank you.

    Mr Dwee

  45. David

    If the foreigner want work in China Company. How to work out the personal income tax and personal social insurance if monthly salary is RMB10,000?

    Is the personal income tax will refund back once we return back to the country after end of the work permit?

    What is the personal social insurance? 45-48% of the salary? Is this can claim back?

    Please advise.

    Thank you.

    David

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