120K Self-Claim Tax in Details

Disclaimer: Just like previous post, this is just want I *THINK* it works. It is NOT an official explain of the tax issue.

The source of this explanation came from the tax summary paper I received in mail and this link.

Who Should Follow the Self-Claim Routine

Anyone who have annual income above 120K RMB should self-claim his/her tax to the tax bureau from Jan 1 to March 31 from this year.

Personal annual income includes not only salary, it also include bonus, income for labor, interest, stock dividends, author’s remuneration, copyright royalty, rent of property, transfer of property, accidental income and other income.

From the list, it seems any money that goes into someone’s pocket should be claimed. There are some exception, but none of them seem to be common to normal people.

Tax rate for most of the items are 20%.

How to Claim it

The tax bureau provides a hot line: 12366 to handle questions. People can go to their office to claim between 8:30 to 16:30, from Monday to Saturday.

What is the Status?

In the most important national wide news time from 7:00 to 7:30 PM, there is an update for the status yesterday. 9 days after the policy was announced, there are 1253 persons claimed it in Beijing, 400 for other cities, and no one claimed in some cities.

When I search the news on Internet, many cities didn’t see anyone come to their office to claim.

According to some (unconfirmed) sources, people we didn’t claim their tax will be charged up to 5 times of 50% of their tax due.

How about the Policy?

I am pretty sure that this policy will be among the countless policies that no one follow. Just like the ICP license policy issued in 2000, it was not enforced until the year of 2006.

For this one? It times time, maybe for 5 years for this policy to be really enforced. This can be a problem in China that laws and regulations are not accepted easily, just because the process of drafting these laws didn’t involve the people.

9 thoughts on “120K Self-Claim Tax in Details

  1. Micah

    I’m not really clear on what my income was last year, so how can I declare the taxes I paid? My company is preparing some kind of report for us but until I receive that report I can’t go in to declare those taxes.

    Also, the hours of operation “between 8:30 to 16:30, from Monday to Saturday” are just precious. I’m guessing we’ll be seeing loooooong lines on Saturdays in March.

    It’s amazing the amount of effort and mobilization that is *still* wasted here in China. For example, that housing RFC about small-to-mid-sized housing, scrapped after two days. Hmmm.. Seems like these situations could be avoided with a little common sense and better planning.

  2. Jianfeng

    Hi, Jianshuo, What I am saying is not relevant to the tax topic here. Sorry about this. You know, I’ve just terminated my sina blog and am looking to launch my own blog site, more or less like yours. Loosely speaking, it will also be my personal website.

    I am wondering if you could give me some advice on setting up a personal blog site, for I believe you should have tons of experience to share on this. I specially want you to recommend some powerful, easy-to-use blogware. I’ve noticed your blog is powered by WordType and I don’t know if it could work for me.

    So, would you care to write an entry on blog set-up and blogware? I really need this kind of education.

    Look forward to hearing from you soon.

  3. carsten

    Jianshuo, how can a foreigner know how to do ?

    All seems to be in chinese… Even your link.

    By the way, I like your statement “didn’t involve THE PEOPLE” !!!

    CCP make thousands of new regulations and laws every year, but noone knows about them, all is just perceived by occasion : “Did you hear about that ? I saw it on a homepage” or so.

    Noone knows (or even wants) to obey the laws in China, unless a hard enforcement is done.

    To be convinced, just go out on the street, in the traffic !

    Noone knows how to do, noone knows the rules.

    In Europe, all school kids have many years in school of traffic teaching.

    In TV, advertisements COULD be shown every 5 minutes before full hours, after the never ending ancient soap operas, to inform common people of new things to think of (regulations, etc.), but nothing is actually done.

    CCP is only thinking of getting more and more money.

    The overall infrastructure is just made sufficient to get more money, not to satisfy the common people fully.

    Billions of RMB is spent on the chinese men who goes into space, and looks down on all the chinese who can’t go home for spring festival because of lack of transportation structure, and see the people who can’t get any public help if they have a deadly disease.

    The use of all the gathered money is certainly to discuss (of course in deeeeep privacy).

    This is truly “ROCCP”, not PRC.

    So, I fully understand that the chinese people do not want to

    stand in long lines to pay some weird and yet unknown taxation !

  4. ning ning

    I think the people will follow the policy when the national credit system work. Maybe 2 years later , you can see the people queue in line before some tax agency offices.

  5. Jet So

    I heard that the central Government issued another warning on delinquent high-income individuals ( >120K/month RMB) that fail to file their personal income taxes on time during the closing of this year’s People’s National Congress. Reportedly, they are going to unleash several thousand tax auditors to inspect these individuals this time. Any ideas how this is going to turn out?

  6. Edmund

    China individual income tax (IIT) on wages and salaries are charged at 9 progressive rates ranging from 5% to 45%. The schedule contained in the captioned website is valid.

    The IIT on income of RMB 70K is not 35% ‘flat’, but 35% on RMB 66K after 6375 deduction.

    The calculation on income of RMB 35,000:

    35,000 – 4000 = 31,000 X 25% less 1375 deduction, i.e. 6375; therefore your net income would be 35,000 – 6375 = 28625.

    If you take a look again at the schedule of the mainland IIT on the amounts of ‘quick calculation deduction’ in your mentioned website are calculated (for your quick reference) of the amounts of IIT in the lower brackets of incomes.

    Rental reimbursement is considered part of the employee’s income and the income in total is subject to individual income tax in the mainland. The tax is charged at the progressive rates of 5% to 45%, briefly as follows:

    Monthly Salary Tax Rate Quick Calculation Deduction

    RMB5,000 – 20,000 20% RMB375

    20,001 – 40,000 25% RMB1,375

    40,001 – 60,000 30% RMB3,375

    60,001-80,000 35% RMB6,375

    80,001-100,000 40% RMB10,375

    RMB100,000 + 45% RMB15,375

  7. DB

    What does the term “gross income” comprise in China? Does it include:

    – The obligatory contributions to the social security fund and the housing fund?

    – Company-provided health insurance?

    – Allowances such as public transportation allowance, expense allowance, child allowance etc.?

    Besides, how are bonuses taxed? Is it true that bonuses are a legal means to avoid taxes (not tax evasion or tax fraud, which is illegal)?

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