Job Discussion Forums

[prawn]

payroll treaties? recalcitrant tax exercise scooters? are u serious? on 6000rmb a month u'd have to work here for 400,000 yrs before you made 78G US. and if its not that long it would seem like twice that.

according to my sources on the peoples standing committee, all earnings over 5000 a month are taxed. 5% up to 500 over, 10% on 501-2000 over, 15% on 2001-5000 over...should i go on or would u like a nice cup of tea and a good lie down first?

love prawn.

[Volodiya]

Hey, Prawn, you're right, of course. You're probably wisely enjoying a nice, cold brewskii, while I'm pouring over tax law.
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Since the first 4000 RMB is exempted under Chinese domestic law, we're struggling over the tax on the excess above 4000- which for many of us, should also be exempted (under the applicable tax treaties).

[sfarkas103]

I don't want any misunderstanding here. I don't mind paying taxes in China. I simply want to make sure that it goes where it should. If I am supposed to I will. No problem.

[prawn]

a small whisky in fact joe. still, i have been told a couple of times by people in chinese officialdom - who stood to gain nothing from me - that all income over 5000 ( not 4000) is subject to tax. are you sure that the 4000 story isnt concocted by some penny pinching school trying pinch a few of your pennies? you can always tell a school to pay you the full amount and then sort the tax stuff out yourself. its not impossible. then again i've been informed that the visa laws changed on may 1st, so maybe the tax laws have too.

[Lee_Odden]

[Volodiya]

Another web site for those who are still following this discussion- a statement of the domestic income tax laws of China.

http://www.novexcn.com/personal_icm_tax_99.html

See especially, Art. 4, section 4.9, which recognizes that there are categories of income exempt from taxes as a result of international treaties entered into by the Chinese government.
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For those of you who may wonder where this is leading, once those who are interested are satisfied that their wages in excess of 4,000 RMB should be exempt from Chinese income taxes as a result of existing tax treaties, we will still have to discover the exact mechanism for asserting the exemption from taxes (unless there is a "sleeper" out there who has actually done it and will tell us how he did it).

[Talkdoc]

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[Volodiya]

I'd like to start by saying that I appreciate anyone taking the time to try to tease out the answer to a somewhat complex tax question, as Talkdoc obviously has. But, begging Talkdoc's pardon, this discussion has never been about taxes on money we earn by offering independent services as teachers. Instead, the question has to do with our liability for Chinese Income Tax on wages we earn as teachers- employed by Chinese universities, colleges, schools or other accredited educational institutions.
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I have intentionally avoided reaching a final conclusion on this question; but, I have to say that I remain interested because of what appears to be increasingly promising results of my research, as I will explain later in this post.
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For those who have made the point that they're not trying to avoid paying taxes, let me say that we are not trying to avoid paying taxes we are obligated to pay; rather, we are trying to avoid paying taxes we are not obligated to pay- if that turns out to be the case.
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Now, to the result of some of my most recent investigation of this question. We have chosen to focus on the U.S.-China Tax Treaty, because some focus is necessary to get anywhere with this investigation and, frankly, it's just easier to get full details on the U.S. end- as opposed to the Chinese end- of this question.

U.S. Tax Law distinguishes, as does the U.S.-China Tax Treaty, between compensation for independent personal services, and compensation in the form of wages paid by an employer to an employee. You probably intuitively recognize the difference, but to read a fairly straight forward explaination of the difference between the two, go to the instructions for IRS form 8233, found at-

http://www.irs.gov/pub/irs-pdf/i8233.pdf

especially page 1, and page 2 of the instructions.

It is clear from my research that Chinese teachers who are teaching in the U.S. are receiving the full, apparent benefits of the U.S.-China Tax Treaty, provided they file the appropriate forms with the taxation authorities of the U.S. (I.R.S.). The full, apparent benefits of the treaty are the complete exemption from U.S. income tax of all of their wages earned as teachers, for an aggregate period of three years, just as provided in the tax treaty. They must file form 8233 and make a statement to the taxing authorities, asserting their rights under the tax treaty. The statement they must make appears in I.R.S. Publication 519, Appendix B, page 60, under the heading, "People's Republic of China". The statement simply tracks the language of the tax treaty, especially Art 19, which covers teachers employed by universities, colleges, schools and accredited educational institutions. You can find this at-

http://www.irs.gov/pub/irs-pdf/p519.pdf

Of course, the fact that the U.S. is enforcing the tax treaty to the benefit of Chinese teachers in America is only some evidence- though positive in nature. Further research on the Chinese end of this question is still necessary.
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In a subsequent post, I'll put forward the information, such as I've been able to locate, on the question of residency raised by Talkdoc and how it may figure in this discussion.

I understand this can't be very interesting to any but a few of us, but the possibility exists that there may ultimately be a favorable outcome to this issue and some accompanying benefit to some who are employed as teachers in China.

[Talkdoc]

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[THUD & BLUNDER]

We foreign teachers at a Guangzhou university have just been told that we will have to pay tax on our return air fare.
Paying tax on a reimbursement? What do you make of that?

[Talkdoc]

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[sbucha004]

everyone always says the max. for not paying taxes is 4000 RMB, does anyone know where there's an official document or link saying that? my school is trying to refuse to change money for us on the basis that if they provide the tax certificate, we'll have to pay taxes which haven't been paid, but they insist that the limit is 3500 rather than 4000... (our salaries are 4000)... so i'd really appreciate any information anyone has!

thanks,

susan

[Talkdoc]

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[Ludwig]