Personal Income Tax in China
By Jian Shuo Wang on 2007-01-08 23:27 · Living in ShanghaiDisclaimer: 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 Comments
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?
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 !
As far as I am concerned, I need to pay 21% of my salary to cover the insurance.
Biogirl
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?
in our company, all the expats are paying tax in Shanghai, while they get their salary paid from Europe
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 !
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?)
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.
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
Not a lawyer or HR company, but the real thing.
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
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.
Not a lawyer or HR company, but the real thing.
Posted by: carsten on April 1, 2007 02:48 PM
http://www.law999.net/law/doc/b/1994/01/28/00076447.html
REGULATION IN ENGLISH
IF you wanna find resources i can try my best to help you.
MY EMAIL: peisi_c@hotmail.com
Regulation in English.
I hope that will help.
A: 3000 Rmb
b: 3300Rmb
c: 5500
D: 7000
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.
thank you
Sincerely
Sandeep
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, ...)?
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
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.
pls explen to me what is the peoceduer take a withholding tax clearance certificate
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?
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
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..
Thank you.
Mr Dwee
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