Job Discussion Forums

garbotara · Joined: 15 Sep 2003 Posts: 529 Location: China

The school I am working at changed hands again.The pay was late- what else is new.It had been late every month since I started there.But, what took the cake this time was that they taxed our 1000 yuan bonus 25%.I thought bonuses were given to you personally in an envelope.Can someone clear this up for me.
Once the head of the IBO held on to the money for 4 days lying that it was going to put it in the bank.The money was sitting in the financial office ready for collection.So instead of it being right on-time for some , they got paid 5 days late.The ones that have it stipulated that they get paid on the 31st or the 1st were 10 days late.
You know we all work hard.I got all the oral exams done for over 300 kids.It was actually quite fun.I got my grades in a week earlier than I had to so the Chinese teachers would not have to scramble for them at the the minute.What would happen if I decided to go everything late?

davis · Posted: Sun Feb 22, 2004 1:58 am Post subject:

As I understand it: bonuses are taxable because it is considered income. 25% sounds rather steep though. Of course that will depend on your total salary for that month. The first 4000 Yuan is non-taxable and then the tax rate goes up in increments from there. Sorry I can't remember the rates. But if you made 5000 (for example) as your salary and 1000 as your bonus your tax would be a percentage of 2000 Yuan not 6000.But like I said...25% seems a bit steep unless you are making a pretty hefty salary.

Guest · Posted: Sun Feb 22, 2004 3:10 am Post subject:

I was wondering why "tax" has not been mentioned to me - it must be because I signed the initial contract at 2,500 yuan per month, and now receive 3,500 yuan per month - under the amount that you get taxed on! I did not know that before!

goldstar · Joined: 22 Feb 2003 Posts: 44 Location: Henan

Did you/ can you get an official tax receipt? If you're paying it you might as well have the proof.

Roger · Joined: 19 Jan 2003 Posts: 9138

I have posted many times on this issue, but most of us don't have to pay so long as we are employees of Chinese outfits. If the school is owned by a foreign business then you are more likelyto be assessed for tax.
As someone said, the first 4000 are non-taxable, but wait a minute: that does not mean every month you get paid 5000 they only subject to tax 1000 of it. I think, it's on a one-year income basis. From the total, they deduct 4000, but they add bonus and airfare as well as housing costs.
The tax rate kicks in at 25% at a relatively low amount; I for example had to pay 25 percent on a flexible income that was based on an hourlywage of RMB 150 and thus fluctuated from 5000 to 6000. But then again, the first 4000 were never really deducted; it would have been futile fighting for that.

If you do pay tax, you must be given a chopped tax receipt. This you will have to show eventually. It might be at the border - if you don't have it you might have to pay up then and there!
This is specially interesting to F visa holders; businespeople have to pay a tax as soon as they live in the mainland for 183 days.
That's in theory, anyway...

Visit www.dezshira.com They prepared a nice and handy tax flyer some time ago. Maybe it's on their website.

davis · Posted: Sun Feb 22, 2004 7:11 am Post subject:

How so like China. I'm in Guangxi and I'm making a decent wage. More than mentioned on any of the above posts but I only pay 10% on tax on what I make over 4000. I also receive 1050 for housing allowance which is not taxed. At schools end last summer I was not charged a yearly income rate either. Maybe I've just been lucky. Also I've yet to receive a tax statement though I've asked several times. Maybe the tax is actually the boss and bookeeper's little creative bonus.

clomper · Joined: 07 Oct 2003 Posts: 251 Location: Beijing

Hmm.. As Roger said, 4000 is non-taxable. However, I don't know how much is the tax rate beyond that. Is there a website wherein we could check the rates?

The school asked us if we would like our pay to be deposited directly to an account. However, they will deduct 20% from the extra amount beyond 4000 yuan. They're deducting 10% right now and it's in cash. So I opted for cash instead of an ATM account.

So what should be the rate deductible. They issue us tax receipt though.

jamema · Joined: 12 Jan 2004 Posts: 20 Location: Dalian

This link shows income tax rates.

http://www.shanghaiexpat.com/modules.php?op=modload&name=FAQ&file=index&myfaq=yes&id_cat=2&categories=Living+In+Shanghai&parent_id=0#52

Liaoningtraveler · Joined: 17 Feb 2004 Posts: 3

China policy regarding income for foreign teachers is as follows:
Chinese law provides that the first 4,000 (four thousand) RMB of salary is exempt from income (Base Exemption). China income tax is due on any amount above this 4,000 RMB.

Total Salary minus Base Exemption equals Taxable Amount
Taxable Amount times Tax Rate minus Tax Exemption equals Tax Due

Base Exemption = 4,000 RMB

Your salary - Base Exemption= Tax Rate
Below 500 RMB = 5% with deductable of 0 RMB
500 to 2,000 RMB = 10% with deductable of 25 RMB
2000 to 5,000 RMB = 15% with deductable of 125 RMB
5,000 to 20,000 RMB = 20% with deductable of 375 RMB
Any thing over 20,000 RMB a month and you should not be on this forum

For example, Total Salary of 6,200 RMB would be taxed at:
6,200 � 4,000 = 2,200
2,200 x .15 � 125 = 205 RMB (Income tax due)

As for the bonus it is income so it is taxable unless the business can be writen off by your employer. If your employer were to write it off as a consulting fee then it is taxed at a higher rate (but that would not be proper for a teacher bonus). Your employer could write it off as a travel expense but would need travel receipts from you for this. You then would probably pay no tax (depending how taxing authorities see it). In any case it depends on the local officials ideas.

Your employer should also pay money to the labour bureau tax, but this is a seperate issue and should not invovle your personal income.

Susie · Joined: 02 Jul 2003 Posts: 390 Location: PRC

The following clause is included in a PRC contract:-

"Income tax shall be based on a teacher�s total income for the month, including salary, extra pay for extra work, housing allowances and performance bonus."

davis · Posted: Wed Feb 25, 2004 11:38 am Post subject:

Susie said"The following clause is included in a PRC contract:"-

"Income tax shall be based on a teacher�s total income for the month, including salary, extra pay for extra work, housing allowances and performance bonus."

Doesn't mention that anywhere in my contract. Doesn't mention tax at all....