Job Discussion Forums

[jammin]

Well, I've been in China over 2 years now without having to deal with this particular "inevitability", but the time has come.

Is anyone out there paying taxes? (Of course you are, since you are all fine, law abiding folk), and if so, what is the rate?

My school is new to the foreign teacher gig, and has only recently realized that I should have been paying tax for quite some time. While I'm not too worried about the past, I am curious as to what kind of damage I'm looking at in the future.

Also, is there any precedent for schools covering their teacher's tax, and is that legal at all?

Cheers....

[Minhang Oz]

I'm in the same situation, and this is the story as far as I know- corrections welcome though.
Up to 4000 pm your school covers it. Over that, you pay tax, unless there's some kind of pre-arrangement. I pay 10% on amounts over 4000. Other work- overtime etc is cash in hand, and tax free.
Let's get some forum input here.
.

[wOZfromOZ]

MOzzie has sumed it up well here.

Anything over 4000 salary is taxed.

Airfares,
accomodation,
Overtime,
travel allowance,
locality allowance,
accomodation allowance,
teacher level incrementals,
yearly bonuses,
housing allowance,
internet/ telephone allowance,
meal/breakfast allowance
and medical bill reimbursement.......
.......... is not taxed. ( and that's fine cause that's often more than your base salary!)

wOZfromOZ

[Roger]

The taxes have been around for some time yet, but few of us have been milked by the taxman. 4000 is the ceiling below which you are taxfree. Above it, there is a sliding tax rate. Up to 5000 is subject to 10 to 15 % (do not know the exact rate but you can check it with dezshira.com). More than 5000, and you pay 20%.
I have until recently paid 20% on wages earned at a private business that amounted to 5400 or more. I was given a receipt with each salary slip. There were two or three taxes, but the company footed the smaller two of them (maybe an extra 2%), which may have been local add-ons.
The 20% was a national tax, which means the central government is eagerly awaiting such payments from provincial and municipal tax bureaus.
These will preferably tax non-national businesses. It is "Foreigners First", that is, if your school is a Chinese one (most likely) you may go taxfree, and if it is an international one or a JV, it most likely will be required to pay taxes.
You can deduct up to 4000 from your annual income, but you pay tax on accommodation and food.
And a special Chinese specialty: Nominally you must also pay taxes on "other incomes" - such as rental, royalties or business profits in other jurisdictions (maybe this rule has been dropped by now, but it was certainly in the pipeline until very recently!).
Now is the time for II's in the closets to out themselves! You will need a good explanation at the border if you have stayed in China for 184 days or more on a F visa (you need to pay business tax!). Hold on to receipts, guys and gals!

[yaco]

Woz from Oz you summed up the tax situation succinctly.

You do not pay tax on allowances as these are not part of your salary.

I received my airfare reimbursement, holiday allowance, medical allowance this week and the school wanted to tax it.

Teachers beware - I had to give the school a copy of the ' Chinese Income Tax Regulations' to receive my correct entitlements.

Of course the income tax would have ended up in someon'e back pocket.

[Minhang Oz]

Roger's usually correct with his information, in which case I'm being undertaxed . However, I won't complain to my employer about it. I think having a tax certificate from your employer is pretty important when you leave the country!

[ESL Guru]

TWO ALTERNATIVES:

1. Put in your contract that your salary is net after taxes.
2. Take 4,000 in salary and the rest in expense account. This is the method utilized by one of the largest Business Institutes so they avoid the bookkeeping hassels.