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jeffinflorida
Joined: 22 Dec 2004
Posts: 2024
Location: "I'm too proud to beg and too lazy to work" Uncle Fester, The Addams Family season two
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 Posted: Sat Apr 29, 2006 2:46 pm Post subject: The Tax rate |
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My employer has informed me that I must pay tax on my salary.
The HR person said the tax is only about 100 rmb per 8000 rmb a month I make.
Does this sound right to anyone?
i have never been taxed before even when I made over 8000 rmb a month from a single employer.
Ideas? Input? Is there a Chinese IRS scale somewhere to get the truth? |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sat Apr 29, 2006 3:07 pm Post subject: Re: The Tax rate |
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| jeffinflorida wrote: |
The HR person said the tax is only about 100 rmb per 8000 rmb a month I make.
Is there a Chinese IRS scale somewhere to get the truth? |
100 RMB is impossible. Anything over about 4800 is taxable using a progressive scale. Even if you were in the 5% tax bracket, you're looking at 160. However, you are in the 15% bracket. It could be they are trying to b.s. you with a "lowball" figure and then they hit you with reality when it's too late.
Or it could be they are scamming you and they just pocket whatever amount they deduct as "tax". Some schools will let you produce a copy of someone's Chinese ID and pay you as though you were two people with each having minimal tax liability.
For expats in Guangdong, all amounts above 4,800 are taxed at the following rates:
< 500 = 5%
> 500 < 2000 = 10% (minus 25.00 standard deduction)
< 5000 = 15% (125.00)
< 20000 = 20% (375.00)
< 50000 = 25% (1275.00)
You can call the Tax Hotline for more guidance: 96900. |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sat Apr 29, 2006 3:14 pm Post subject: |
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This is what I have and is based upon monthly wages:
Schedule of Individual Income Tax Rates (applicable to incomes from wages and salaries)
Not exceeding 500 yuan - 5%
Exceeding 500 yuan but not exceeding 2,000 yuan - 10%
Exceeding 2,000 yuan but not exceeding 5,000 yuan - 15%
Exceeding 5,000 yuan but not exceeding 20,000 yuan - 20%
Exceeding 20,000 yuan but not exceeding 40,000 yuan - 25%
Exceeding 40,000 yuan but not exceeding 60,000 yuan - 30%
Exceeding 60,000 yuan but not exceeding 80,000 yuan - 35%
Exceeding 80,000 yuan but not exceeding 100,000 yuan - 40%
Exceeding 100,000 yuan - 45%
(Note: The monthly amount of income taxable as the term is used in this Schedule means the remainder after deducting 800 yuan or additional deduction for expenses from the monthly gross income in accordance with the provisions of Article 6 of this Law.)
This tax free income rate is now RMB1,600 for everyone except for foreigners who get RMB4,800 tax free.
So if you are earning a wage of RMB8,000 per month minus your tax free income of RMB4,800 then your taxable income should be RMB3,200. That means that you should be paying around 15% tax which by my calculations is around RMB480. This is quite a bit above what your school has told you. You might want to ask them how they are calculating your taxes. |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sat Apr 29, 2006 3:16 pm Post subject: |
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Looks like Joe.C posted at the same time as me. Well a bit before.
Joe.C I have a feeling that your figures may be based upon the income tax rates for income derived outside of wages and salaries (e.g. business operations, rental properties etc.) Can you clarify this? |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sat Apr 29, 2006 3:32 pm Post subject: |
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| clark.w.griswald wrote: |
Looks like Joe.C posted at the same time as me. Well a bit before.
Joe.C I have a feeling that your figures may be based upon the income tax rates for income derived outside of wages and salaries (e.g. business operations, rental properties etc.) Can you clarify this? |
Not sure what you mean, Clark. My figures are nearly identical to yours but for the fact I didn't carry on after the 50k mark and I included the standard deduction from total tax liability.
There is a "standard deduction" amount that is deducted from net tax liability for wages and salaries. For example, let's take Jeff's 8,000. At the 15% bracket for the 3,200 he earns in excess of 4,800, his gross tax liability is 480. From that gross tax liability they subtract 125 and withhold from his paycheck the grand total of 355.
These figures are for salaries & wages. Tax rates for other items that you mentioned I do not know.
Also, though many employers don't know or want to be bothered with the hassle should they know, you can present receipts for purchases in various categories to be used in reducing the amount of income you are taxed on. Take Jeff's taxable 3,200. He could rpesent receipts for transportation or food for, say, 1,000 and his taxable 3,200 is reduced to only 2,200. I do remember there being alimit on this trick and I believe the limit was 50% (eg. in Jeff's case he could only present receipts up to a total of 1,600). |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sat Apr 29, 2006 3:38 pm Post subject: |
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If you have a look at the link in my post you will see two tables. One is for personal income tax (wages and salaries) and the other is for personal income tax (business etc.).
I agree that in Jeff's case the tax rate is the same so it probably doesn't matter too much, but it may cause confusion for others who may be in a different bracket for which our two rate tables clash.
You make a good point about extra deductions. I think that most of us just pay our taxes and be done with it. I know that this is what I do as I consider the tax rates to be quite reasonable here compared to back home. But I think that it is worth checking into the possibility of extra deductions particularly if you are here long term. |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sat Apr 29, 2006 3:42 pm Post subject: |
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| clark.w.griswald wrote: |
| I agree that in Jeff's case the tax rate is the same so it probably doesn't matter too much, but it may cause confusion for others who may be in a different bracket for which our two rate tables clash. |
I'm using the little booklet available from the GD Tax Bureau. Either your website is out of date or each province handles things a bit differently. In any event, 96900 is the number to get up to date information from.
Last edited by Joe C. on Sat Apr 29, 2006 3:48 pm; edited 1 time in total |
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clomper
Joined: 07 Oct 2003
Posts: 251
Location: Beijing
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| Posted: Sat Apr 29, 2006 3:44 pm Post subject: |
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Joe..
Do we file for an annual income tax return just in case we have a refund or anything??
Also.. where can I get an English version of the tax system here in China?? Just in case I have a dispute??
Which type of receipts are allowed to reduce the amount of income?? I should keep my receipts then.. 
Claudine |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sat Apr 29, 2006 3:52 pm Post subject: |
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| clomper wrote: |
Joe..
Do we file for an annual income tax return just in case we have a refund or anything??
Also.. where can I get an English version of the tax system here in China?? Just in case I have a dispute??
Which type of receipts are allowed to reduce the amount of income?? I should keep my receipts then..
Claudine |
No annual tax return system here ... yet. Refund?? Forgetaboutit. This is China.
Not sure where you are, but the Guangdong Tax Bureau has this cute little English booklet which explains the whole tax scheme for foreigners working in Guangdong. Call 96900 and ask them where you can pick one up.
I am sure that included in the category of receipts that are useful are those for transportation, food, books, clothing and business necessities. Oh, and also receipts for housing. The only problem is that many employers either don't know or pretend not to know so as to avoid the extra accounting hassle of dealing with it. |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sat Apr 29, 2006 4:24 pm Post subject: |
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| Joe C. wrote: |
| clark.w.griswald wrote: |
| I agree that in Jeff's case the tax rate is the same so it probably doesn't matter too much, but it may cause confusion for others who may be in a different bracket for which our two rate tables clash. |
I'm using the little booklet available from the GD Tax Bureau. Either your website is out of date or each province handles things a bit differently. In any event, 96900 is the number to get up to date information from. |
I don't think that national legislation varies between provinces. Certainly interpretations of that legislation can vary, but the legislation would override this.
As to the suggestion that what I have quoted may be out of date, well I don't believe that it is as I have not seen any updates of the legislation. The same information contained in my earlier link can also be found in this article dated August 24, 2005. Admittedly that article is not 100% up to date as it doesn't take into account the recent changes that saw a raising of the tax free limits, but it seems to indicate that the body of the legislation has not changed. Perhaps the discrepancy lies with your little book. |
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kev7161
Joined: 06 Feb 2004
Posts: 5880
Location: Suzhou, China
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| Posted: Sat Apr 29, 2006 10:40 pm Post subject: |
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This is what I gather from this website:
http://www.dezshira.com/china_individual_income_tax.htm
First, deduct 4800 from your monthly salary (let's go with the OP's salary of 8000):
8000 - 4800 = 3200
According to the website, your salary falls in the 20% bracket, so now take that difference by 20%
3200 x .20 = 640
Then the website has a "Quick Calculation Deduction" (has anyone heard of this? What is this?) of 375.
640 - 375 = 265
So, according to the above website (and it has not been updated with the new initial deduction plateau of 4800 by the way), you should have 265rmb taken out every month.
Is this accurate? Who knows? Here's an article about the new tax threshold:
http://journeyeast.org/News/IncomeTaxForeigners.asp
It may be worth printing out both pages and bringing them to your FAO so they can see where you are getting your informatioin. And, hey, if they only want to deduct 100 each month, more power to them! |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sun Apr 30, 2006 12:30 am Post subject: |
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| clark.w.griswald wrote: |
I don't think that national legislation varies between provinces. Certainly interpretations of that legislation can vary, but the legislation would override this.
Perhaps the discrepancy lies with your little book. |
Of course it should be the same across all provinces. My stating that maybe it weren't was just a polite way of saying your figures are off the wall. 
Since the little book is issued directly by the GD Provincial Tax Bureau, I'd have to say the error lies more likely in grey matter relying on some generic website. |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sun Apr 30, 2006 2:49 am Post subject: |
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| Joe C. wrote: |
| Since the little book is issued directly by the GD Provincial Tax Bureau, I'd have to say the error lies more likely in grey matter relying on some generic website. |
So it's a case of trying to discern between legislation produced by the central government (the information contained on both of the websites that I have linked to) or that produced by a provincial government (that in your little book of Guangdong). I know which I tend to believe.
Anyway, I am sure that this is something that we are not going to agree on. My initial reason for pointing out the discrepancy for anyone who may read this thread and get confused. I think that you will agree that my tone is not one of a pissing contest but instead one of clarification.
I don't know why the information in your little provincial book varies from the legislation the central government puts out, but maybe you can give them a call on that number that you have posted here and ask them about the discrepancy. Afterall, there may be a perfectly legitimate reason for the discrepancy such as the area being considered some sort of special economic zone or the like.
My advice however remains unchanged (particularly as most of us do not live in Guangdong) and that is to follow the central government regulations that I have posted here. |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sun Apr 30, 2006 2:55 am Post subject: |
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| clark.w.griswald wrote: |
| Joe C. wrote: |
| Since the little book is issued directly by the GD Provincial Tax Bureau, I'd have to say the error lies more likely in grey matter relying on some generic website. |
So it's a case of trying to discern between legislation produced by the central government (the information contained on both of the websites that I have linked to) or that produced by a provincial government (that in your little book of Guangdong). I know which I tend to believe.
Anyway, I am sure that this is something that we are not going to agree on. My initial reason for pointing out the discrepancy for anyone who may read this thread and get confused. I think that you will agree that my tone is not one of a pissing contest but instead one of clarification.
I don't know why the information in your little provincial book varies from the legislation the central government puts out, but maybe you can give them a call on that number that you have posted here and ask them about the discrepancy. Afterall, there may be a perfectly legitimate reason for the discrepancy such as the area being considered some sort of special economic zone or the like.
My advice however remains unchanged (particularly as most of us do not live in Guangdong) and that is to follow the central government regulations that I have posted here. |
Some of Roggie's DNA has rubbed off on you. You are quoting private websites as authoritative government sources of information.
Anybody with an index finger can call the Tax Bureau hotline -- nationwide the number is 96900 -- and ask. Got an index finger, Clark? |
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clark.w.griswald
Joined: 06 Dec 2004
Posts: 2056
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| Posted: Sun Apr 30, 2006 3:19 am Post subject: |
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| Joe C. wrote: |
| Some of Roggie's DNA has rubbed off on you. You are quoting private websites as authoritative government sources of information. |
Again with the insults! What is wrong with you? If you don't agree with what either Roger or I post here then fine, outline your disagreement. But why do you feel the need to attempt to insult people who have a different view of things to your own.
As to the information on those websites, well where do you think that information comes from. Are you suggesting that they wrote the information themselves and just happened to have come up with exactly the same formulas for working out income tax rates in China.
The information on both of those websites comes directly from the Central Government in China and is to my knowledge the most recent English language update of the relevant legislation. As I have already conceded the legislation does not take into account this years change in raising the tax free rate, but to the best of my knowledge (and apparently that of the foreign accounting company who also host this information) the rates that the central government post are correct.
| Joe C. wrote: |
| Anybody with an index finger can call the Tax Bureau hotline -- nationwide the number is 96900 -- and ask. Got an index finger, Clark? |
I am happy that the information that I have posted is correct. I suggested earlier that as you hold this information in your book so dearly maybe you would like to call them for clarification as to why their information is different from that of the central government. |
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