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North China Laowei
Joined: 08 Apr 2008
Posts: 419
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 Posted: Sat Aug 30, 2008 11:56 pm Post subject: See Below |
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| Moon Over Parma wrote: |
| To date, I haven't found anything supporting the claim, either. |
Indeed, this appears to just more one canard of this Board.
I was a the Foreigner Taxation Suboffice of the Tax Department today and they know nothing about this at all...and they still calculate at the prevailing rate so my stamped, chopped tax receipt was done based on the prevailing rate, not upon the newly-Dave's-aproved-by-gossip revised rate. These are the kind of things that we should be careful about..
NCL1 |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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| Posted: Sun Aug 31, 2008 5:14 am Post subject: Re: Chinese Income Tax |
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| teacherbel wrote: |
Hi!
I hope I can help you here.
I am looking at the contract, which they called "letter of Offer",they sent to me. The school is giving me a monthly gross of CYN 19,831 minus taxes, my monthly net salary is CYN 13,700. That means the Chinese Tax in Shenzhen is CYN 6,131!
I hope I help.. |
Actually, no you didn't. But we can help you.
The tax your school cited struck me as wildly off the mark. The top MARGINAL tax rate on income under 20,000/month is 20%. Even at a FLAT tax rate of 20% with no exclusions or deductions, the tax on 19,831 would be less than 4,000 RMB.
But the tax rates are MARGINAL which means different tax rates for different parts of your taxable income-rates increase as your income increases. Plus, for foreigners, there is a 4,800 RMB deduction. As I said, their number was wildly off-mark. So I sat down and did the math because the discrepancy your school quoted you was so large.
You can find a synopsis, the relevant tax tables, links, and some examples at posts that bendan and I wrote in this thread:
http://forums.eslcafe.com/job/viewtopic.php?t=45867&postdays=0&postorder=asc&start=30
Here's the math for your situation, based on the stated salary of 19,031 and calculated both under the tax schedule as well as under the tax bureau's Quick Calculation Tax Table. Results will be the same, if the calculations are done correctly.
Tax Table method:
Income - Foreigner Deduction = TAXABLE Income
19.831 - 4,800 = 15,031 Your TAXABLE Income
Apply each of the MARGINAL rates to each part of your income. (Again, tax rates can be found at the link above)
TAXABLE Income X Tax Rate
500 x 5% = 25.00 (First 500)
1500 x 10% = 150.00 (Excess over 500 up to 2000 = 1500)
3000 x 15% = 450.00 (Excess over 2000 up to 5000 = 3000)
10031 x 20% = 2006.20 (Excess over 5000 = 15031-5000 = 10031)
15031 ------------- 2631.20 Tax Due
Quick Calc Method:
Income - Foreigner Deduction = TAXABLE Income
TAXABLE Income x top marginal rate (20%) - Quick Calc Amount (375)
19,831-4,800 = 15,031 TAXABLE Income
15,031 x 20% (Tax rate) = 3006.20 Tax
3006.20 (Tax) - 375 (Quick Tax Amount) = 2631.20
Look! They match!
(Again, the tax rates and tables-regular and Quick Calc-can be found at the link above and the links cited in that post).
So, your tax on 19,831 should be 2,631.20 and your take-home pay just shy of 17,200.
Interestingly and as an aside, the difference between the tax your school quoted you (6131) and the actual tax (2631 rounded) is...3,500! What a nice, round number. Must be a coincidence!
If I believed in conspiracies, why, I'd say the school took your salary amount (19,831) calculated the tax (2,2631) then factored in a piece for them (3,500 - which YOU are being taxed on by the way) and then turned to you and quoted you a nice round after-"tax" salary of 13,700! That's if I believed in conspiracies.
Last edited by ymmv on Sun Aug 31, 2008 6:25 am; edited 1 time in total |
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arioch36
Joined: 21 Jan 2003
Posts: 3589
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| Posted: Sun Aug 31, 2008 5:23 am Post subject: |
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I worked August (though travelling in August is just so much fun).
So assuming they took out any taxes at all (I told them I wanted to pay taxes), I will soon find out if they are right (ie the new tax rate starting at $5,200, which the FAO told me).
However I wonder, I really should have my wife enquire ... as she is disabled, are there any extra dedcutions that can be made (head of household type thing, etc.)
I'll ask my wife to check ot out, but ymmv seems to have this stuff down better then any one that actually works in the tax office
Last edited by arioch36 on Sun Aug 31, 2008 5:45 am; edited 1 time in total |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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| Posted: Sun Aug 31, 2008 5:41 am Post subject: |
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Arioch,
I dealt with this in an earlier post in this thread. The deduction for foreigners was NOT raised when the last raise to the general deduction came through last spring.
This was specifically addressed by the State Council. Have your wife go to the official China Legislative Info website http://www.chinalaw.gov.cn/. Search for a proclamation or article dated 2008/2/28 in which this was addressed. It came from the State Council, not as might be expected, from the State Administration of Tax or the Minstries of Finance or Foreign Affairs. The State Council is the highest authority. (The clue that led me to it was the China Daily article here: http://www.chinadaily.com.cn/bizchina/2008-02/23/content_6478982.htm I noticed from the article that the new regulations were issued jointly by Tax, Finance and State Council.)
It's in Chinese, there is no English version. I don't have a direct link because it appears as a popup when you find it.
It's there. Your wife will find it. It's still 4800. |
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arioch36
Joined: 21 Jan 2003
Posts: 3589
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| Posted: Sun Aug 31, 2008 5:53 am Post subject: |
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YMMV
Don't get me wrong. I think I implied I find your info very convincing. As I said originally, this is based on my FAO, not law. Simply saying that soon I will find out for sure, which is not the same as not believing you, if you get my drift.
Song& Dance once wrote
I have asked 14 FAOs and they all intend to continue withholding tax
| Quote: |
| based upon the old figure until such time as they receive a directive to the contrary, which they have not received as yet. |
But I think we all know that if we all relied on our FAO's we would be screwed 14 times over, not that I really believe he asked 14 FAO's (come on)
But since u seem to be online, ever recall coming across anything about deductions for disbled family members? (Not that the taxes are going to kill me .... if they are even ever deducted) |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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| Posted: Sun Aug 31, 2008 6:18 am Post subject: |
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No problems. I didn't think you were impugning me at all. I'm just trying to help you along and reminding you of my first post which, honestly, didn't seem too authoritative because it lackedd a direct link. Maybe with your wife's help (she's Chinese) she can track it down, translate it and you can report back here.
Can't help you on the disability deductions. I really haven't studied the law in depth - only familiarized myself with the issue of the foreigner deduction and the raw calculation of the tax.
As for the FAO's - I can't really dump on them (on this issue). They don't send this information out to them often or on a timely basis. And in fact, it's not really their job anyway. It's the people in the school's finance/accounting office that are supposed to handle this. They prepare the pay and hand it over to the FAO to deliver to the teacher. Should they be up on this? Yeah. But there office too sometimes is behind.
When the last increase (from 4000-4800) went through in 2006, I had to walk my FAO through it based the stuff I researched and wrote about here back then. Then she had to walk the school accountant through it who then had to contact the local tax bureau to finally verify that the law had been changed. |
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arioch36
Joined: 21 Jan 2003
Posts: 3589
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| Posted: Sun Aug 31, 2008 6:23 am Post subject: |
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| Quote: |
| Then she had to walk the school accountant through it who then had to contact the local tax bureau to finally verify that the law had been changed |
Yep, took me three times to convince them to really look into it.
ANyways, a lot of good threads came out of the post, thanx to all who contributed.
See, my real purpose in the OP was not to be factual to to have heuristic value. I succeeded! That's my spin anyways.
Again, lots of good links, Chinese and english, to check out. Dave's can work |
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Moon Over Parma
Joined: 20 May 2007
Posts: 819
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| Posted: Mon Sep 01, 2008 2:59 pm Post subject: |
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| I discussed this with my current FAO, who I find to be a pretty stand up, on the ball, up to date professional (and I don't say that lightly nor in jest) and she finally got an answer after talking to authorities: the tax remains as was. The 5,200 claim is bunk. |
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North China Laowei
Joined: 08 Apr 2008
Posts: 419
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| Posted: Tue Sep 02, 2008 2:12 am Post subject: See Below |
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| arioch36 wrote: |
| Quote: |
| Then she had to walk the school accountant through it who then had to contact the local tax bureau to finally verify that the law had been changed |
Yep, took me three times to convince them to really look into it.
ANyways, a lot of good threads came out of the post, thanx to all who contributed.
See, my real purpose in the OP was not to be factual to to have heuristic value. I succeeded! That's my spin anyways.
Again, lots of good links, Chinese and english, to check out. Dave's can work |
"Heuristic value"....???
When I reread this thread and all of the twenty-two posts and all the time people on this Board put into checking out this canard, and when I reread the OP's initial posts, it indeed come across that the OP was clearly stating that the tax limit had been raised. So in the end this turned out to be just one futile, sterile exercise by many of us here -- is that what the message above means?
NCL |
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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: Tue Sep 02, 2008 4:28 am Post subject: Re: 5,200 the new tax limit |
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| arioch36 wrote: |
But I was very reliably informed that 5,200 is the new limit, up from 4,800 for the past year and a half.
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So what was the point of this thread then? |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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mikefriend
Joined: 12 Oct 2008
Posts: 118
Location: Sleep walking around the world. But don't wake me up, you might kill me.
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| Posted: Sun Nov 02, 2008 12:31 am Post subject: |
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| So should I tell my school that the new bottom line for tax is 5,200 ? |
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lf_aristotle69
Joined: 06 May 2006
Posts: 546
Location: HangZhou, China
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| Posted: Sun Nov 02, 2008 1:14 am Post subject: |
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If he/she is an idiot they might believe you without checking for themselves... but I doubt that you would get away with it for long... and then the consequences would not be good!
LFA |
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arioch36
Joined: 21 Jan 2003
Posts: 3589
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| Posted: Sun Nov 02, 2008 3:09 am Post subject: |
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| No, as I concurred, my CHinese FAO told me 5,200 based on the assumption that since the Chinese rate was raised by 400, then the laowai rate (laowai deduction plus standard Chinese deduction) would also raise. YMMV has done a wonderful job explaining it all. I was looking forward to seeing if my school would correctly deduct taxes, but since they haven't deducted any , I can't tell. I am getting to the stage of my Chinese life where it is better for me to have them deductt the proper taxes |
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