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Taxation question (DTA)

 
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canrun30



Joined: 03 Oct 2012
Posts: 110

PostPosted: Sat Mar 02, 2013 5:45 pm    Post subject: Taxation question (DTA) Reply with quote

I've been offered a job at a Chinese university and will start in the fall. As an American, I theoretically qualify for the Double Taxation Agreement treaty benefits with China (meaning no tax for the first 2-3 years).

Here's the kicker, though: I worked at a Chinese private language training school in the mid-2000s for about 5 years. This kind of school does not qualify for the DTA benefits (only universities and other governmental organizations do). One of the conditions stated on the contract is that in order to get the tax benefits, one has to have never taught in China before. BUT-- since I taught in a school that did not have this system, and was always taxed on income, I'm wondering if I will qualify this time around when teaching at a university.

The HR department, predictably, had no friggin' clue. I'm sure others must have has this experience before of going from a private language school to a university. Thanks for any help!
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choudoufu



Joined: 25 May 2010
Posts: 3232
Location: Mao-berry, PRC

PostPosted: Sat Mar 02, 2013 6:38 pm    Post subject: Reply with quote

for a university position, don't let taxation be your main deciding factor.
you qualify for the foreign earned income exclusion, so no us taxes.

the first 4800 (?) rmb salary is excluded. you'll be taxed only on the
amount over that. for your typical uni salary, you'll be paying 35-50
rmb/month in tax.

check the wording of your contract. is the salary before or after tax?
negotiate. have the contract changed to read salary is after tax.
same with flight allowance.
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canrun30



Joined: 03 Oct 2012
Posts: 110

PostPosted: Sat Mar 02, 2013 7:35 pm    Post subject: Reply with quote

Thanks!

I'll be working at one of the four joint-ventures in China, so unfortunately tax rates are a rather real concern. Not a deal-breaker, but I'll be paying over 1,000 RMB/month in taxes. I can always make that up in privates, though.

With the salary i'll be making, they won't bargain. Take it or leave it: they made that clear.
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