Job Discussion Forums

[fadoop]

In my previous three teaching jobs in China, I've never had to pay a payroll tax. Now, however, my school is deducting 1000 RMB (about 12%) from each month's salary, claiming this is the proper tax amount. Is this legit or is my school finding some excuse to withhold some of the money it owes me. After all, my other schools were "legal" � one was one of the largest English schools in China � and they left their teachers' salaries alone.

[Alex_P]

According to the Income Tax Act of China, 1996, as revised, income tax is to be assessed on all revenues over RMB 4,000 per month on a sliding scale. Yes, it is true, many schools do not do this but again the government has been clamping down on these loopholes. Income tax is deducted on a graduated scale but since I do not know the amount you are making on a monthly basis, and I am not asking, the 12% is actually under the minimum graduated scale of 15% on everything over RMB 4,000 per month.

Thus, it does make me wonder if you are being scammed. Nonetheless, if they are doing it, then you should INSIST that they provide you with the white red-stamped sheet from the Taxation Office that attests to the fact that you have paid income tax, etc., etc. Unfortunately, it is not a "money-back" at filing time system like in the United States and other countries. It is a straightforward levy.

If you want to e-mail privately with the details (the school, the amount you make monthly, the exact amount being deducted), I can provide you with a more definitive answer.

Right now, however, I do not have enough facts.

[cujobytes]

You needn't pay tax on the first 4000. after that in increases based on the amount earned. I can't help you with the exact figures but it sounds like they are ripping you off. How much do you earn?

[fadoop]

Sorry, I meant to say "tax", not "insurance" in my post.

I earn 9,000 RMB/month.

[chengdude]

The way I have been told the taxation system works is this:
Up to 4000RMB = no tax
The first 500 over that = 5% tax
The next 1500 (to a total of 2000 over the tax-free 4000) = 10% tax
Anything over 2000 the tax-free 4000 amount = 15% tax

So, if you're being taxed 12% and the tax is 1000 RMB, then your salary must be in the 8500 RMB range. Calculating then:

8500 (your salary?) - 4000 (tax-free) = 4500 (the taxable amount)

the first 500 x .05 = 25 RMB
the next 1500 x .10 = 150 RMB
the remaining 2500 x .15 = 375 RMB

Total = 550 RMB tax due

Basically, it sounds as if they aren't taking into account the tax-free 4000 and doing their calculations based on your full salary.

Disclaimer: I suck at math.

[Babala]

If they are deducting an even 1000RMB I would demand to see the paperwork. I lose about 800RMB for tax every month. It's not an even 800RMB though and I make more money that you do so yours should be less.

Unless

Does tax differ from province to province? Do some provinces take more tax than others?

[fadoop]

I have an F visa. Someone told me that with the F visa you are considered a consultant rather than a teacher, so you technically are not required to pay any tax.

Has anyone else heard of this?

[Keath]

20% of 5000 is 1000, which is the taxable income above 4,000 RMB
I'd still want to see the proof they are paying the tax, but its the right calculation.. The first 90 days you are tax exempt (completely)

Keith
www.journeyeast.org

[Alex_P]

[Mephisto]

Hey Alex,
did you get my reply to your email? If you didn't, send me an email at [email protected] and I'll resend it to you once again.
Cheers,
Mephisto

[burnsie]

Good responses here.

But also many businesses have two or three names of the one employee on the books to avoid paying tax. I have been told by my wife's company accountant that 90% of businesses do this for their employees.

For example, the first 4,000 RMB is not taxed but if you earn say 8,000 they put two people under your name at both 4,000 thus avoiding the tax. You usually sign two different payslips.

Then some businesses usually tell the employee they are paying tax (and giving them less money) when in fact they are not and the business is pocketing the money!

This also could be a possibility. Good luck.

[tw]

[bendan]

You should be paying 625 RMB on a 9,000 RMB salary if you are legally employed as a resident foreigner. A local earning this amount would be taxed about 1,200 RMB (the tax free allowance for locals varies from province to province, but for foreigners I think it's always 4,000).

On an F visa, you are still liable for tax on income earned in China, but I don't know if it is applied the same way as for those with residence permits.

[Roger]

It is a bit daft to ask "do foreign emplloyees in China have to pay tax?"

Why should there be a difference between foreign wage earners and local ones?

The proper way of asking questions about tax is to tell what status one has before asking what tax you need to pay.

There used to be a rule that FTs pay no tax in the first 5 years in China; later a limit was set at 4000 per month.
It is true, however, that taxes are collected haphazardously. Some pay, some don't have to.

This is true of Chiense as well; in more well-organised municipalities every single salaryman pays tax no matter what their income is. In many Guangdong communities Chinese pay a tax even if they make as little as 1000 a month. This is why I feel no FT should complain if he or she has to pay too.

Still, there seems to be in force an upper limit below which FTs may escape paying tax. In Guangzhou for example, you don't pay tax if your income is 4000 or below. In principle you also pay tax on your airfare and other pecuniary extras IF THEY ARE REMITTED TO YOU VIA A BANK.
Thus, my university saved me a huge loss by paying out my airfare and holiday bonus in cash. Since my monthly salary is higher than 4000 I do pay a tax on the amount in excess of 4000.

As for 'F' visa holders, they work illegally since business visa holders are not supposed to earn a SALARY. They may collect royalties, commissions and other one-off payments WHICH ARE TAXABLE.
The tax kicks in if you stay at least 183 days a year in China.

[burnsie]