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Wonderful Yunqi!!
Joined: 06 Jan 2008
Posts: 111
Location: With the Lord.
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 Posted: Wed Apr 02, 2008 3:11 pm Post subject: 2008 Chinese Income Tax Law |
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Does anyone know where I can read the new law in English? I've been trying and can't find it, but remember reading here that the base tax-free salary for foreign teachers was increased to 4500, with a rate of perhaps 20%. My memory may be a bit foggy though.
For those who know, perhaps you may be willing to answer 2 hypothetical questions?
What would the approximate tax be on a monthly salary of 7,000 yuan? 14,000 yuan?
Based on my fuzzy math, if the salary is 7k, 2500 would be subject to the tax. If the rate is 20%, then the tax withheld would be about 500. If the salary is 14,000, then the taxable portion is 9500. 20% of 9500 = 1900.
Are there any accountants out there familiar with the Chinese tax system willing to shed some light on this query?
I appreciate your time. Thanks.
Yunqi |
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lf_aristotle69
Joined: 06 May 2006
Posts: 546
Location: HangZhou, China
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| Posted: Wed Apr 02, 2008 4:11 pm Post subject: Re: 2008 Chinese Income Tax Law |
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| Wonderful Yunqi!! wrote: |
Does anyone know where I can read the new law in English? I've been trying and can't find it, but remember reading here that the base tax-free salary for foreign teachers was increased to 4500, with a rate of perhaps 20%. My memory may be a bit foggy though.
For those who know, perhaps you may be willing to answer 2 hypothetical questions? |
I realise you predicated your question with "those who know", but in the short term, and incase no others reply (not likely given the caring sharing bunch we have around here at Daves'), I will give what I think is the currrent situation, or part thereof. I am led to believe that the info I give was current up to at least September 2007...
First, for about the past 1.5 - 2 years the tax free threshold for foreigners has been 4800rmb/month. There is NOT a 20% flat rate of tax now, if there ever was.
After that tax free amount, I think the first 2000 of taxable income is taxed at 5%, the next 3000 is at 10%...
After that I don't have the details on hand, and I can't remember where I found the table that I took those figures from... Sorry.
So, if you were earning 7000rmb/month before tax, you would lose a total of 120rmb in tax, and therefore receive 6880rmb in the hand.
Hopefully others will come to the party with the missing figures... Or, to correct me regarding those I have given...
LFA |
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johnchina
Joined: 24 Apr 2006
Posts: 816
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| Posted: Thu Apr 03, 2008 6:36 am Post subject: none |
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www.worldwide-tax.com/china/china_tax.asp
There's a table with tax rates for different income brackets. However, it doesn't actually say whether this applies to Chinese citizens, foreigners or both.
It also doesn't mention anything about the first 4800 rmb being tax free, but the China-Britain Business Council says this is still true.
That's the best I could find. |
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Wonderful Yunqi!!
Joined: 06 Jan 2008
Posts: 111
Location: With the Lord.
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| Posted: Fri Apr 04, 2008 4:27 am Post subject: |
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I appreciate the responses.
Here's a new twist - which is better tax wise, 2 pt jobs or 1 ft position?
Beyond that, I was told the other day that the 4800 base and incremental rates were only applicable to Full-time teachers. PT teachers have to pay a 16% flat rate on all income paid. |
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skiing
Joined: 13 Mar 2008
Posts: 66
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| Posted: Sat Apr 05, 2008 4:04 pm Post subject: |
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Last week I visited the Chinese government Inland Revenue Department
and was told the following:
First you deduct 4,800 RMB from 7,000 RMB and then from the balance
you look at the following table to get the right percentage to be deducted:
Below 500 5% 0
500 - 2000 10% 25 RMB
2000 - 5000 15% 125 RMB
5000 - 20000 20% 375 RMB
After that you deduct the figures on the right hand side accordingly for
the total amount of income tax to be deducted.
Please correct me if I am wrong. |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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| Posted: Sat Apr 05, 2008 5:50 pm Post subject: |
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| skiing wrote: |
Last week I visited the Chinese government Inland Revenue Department
and was told the following:
First you deduct 4,800 RMB from 7,000 RMB and then from the balance
you look at the following table to get the right percentage to be deducted:
Below 500 5% 0
500 - 2000 10% 25 RMB
2000 - 5000 15% 125 RMB
5000 - 20000 20% 375 RMB
After that you deduct the figures on the right hand side accordingly for
the total amount of income tax to be deducted.
Please correct me if I am wrong. |
No, you are right.
We discussed this a year ago here.
http://forums.eslcafe.com/job/viewtopic.php?t=45867&postdays=0&postorder=asc&highlight=income+tax&start=30
Read the second-last post in the thread (mine) as well as Bendan's various posts. (You can ignore HFG and Kev's contributions to that thread since they never responded to questions put to them.)
I have heard that the PRC is considering raising the minimum taxable income from the current (since 2006) 1600. (Foreigners get an extra 3200 exclusion which is how we arrive at the 4800 amount). I have NOT heard that they are changing rates to distinguish between foreigners and Chinese individual income tax.
Yunqi mentioned that he was told that part-time teachers get taxed at a different rate. I think this goes to the issue of "wage income" vs. "service income". If you are employed (as a contract worker), you're wage income is taxed in accordance with the above advice. Part-time work (i.e. "service income") is taxed at a flat 20%. Similar to self-employed income back home which is treated differently than wage income.
As always, if your school or training center is withholding taxes, make sure they provide you with a copy of the tax payment certificate each month to ensure (a) they are withholding the correct amount; and (b) they're actually paying the withheld amount over to the tax bureau. |
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redpiston
Joined: 30 Sep 2007
Posts: 338
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| Posted: Sun Apr 06, 2008 6:08 am Post subject: |
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| The only way to be sure that taxes are being paid is to inquire at the local tax collectors office ...the are locally regional. |
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kev7161
Joined: 06 Feb 2004
Posts: 5880
Location: Suzhou, China
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| Posted: Sun Apr 06, 2008 9:05 am Post subject: |
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| Quote: |
| Read the second-last post in the thread (mine) as well as Bendan's various posts. (You can ignore HFG and Kev's contributions to that thread since they never responded to questions put to them.) |
Boy, someone has a HUGE chip on their shoulder and it's been there for a LONG time! I think I lost interest in that topic around the middle of the second page and didn't bother to continue following the thread. If you wanted to ask me a specific question, you could've PMed me. We are all very lucky here that you are very knowledgeable in the whole Chinese tax system. Personally, I negotiated a net and gross income on my current contract. I asked them for "X" net amount and then they could figure out what the gross would be and "deduct" from it to get to my satisfactory net pay. I could care less now how it all works and even if they are doing it legally or not. As long as I get my envelope of money every month with a little statement (just in case!) stating my gross/tax/net pay, then I'm a happy camper. PLEASE don't anyone ever ask me for advice or input about the tax issue again so someone can brush off that chip! |
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lf_aristotle69
Joined: 06 May 2006
Posts: 546
Location: HangZhou, China
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| Posted: Sun Apr 06, 2008 12:03 pm Post subject: |
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| ymmv wrote: |
| I have heard that the PRC is considering raising the minimum taxable income from the current (since 2006) 1600. (Foreigners get an extra 3200 exclusion which is how we arrive at the 4800 amount). I have NOT heard that they are changing rates to distinguish between foreigners and Chinese individual income tax. |
I believe that recently (withing the last few weeks???) the individual income tax threshhold for Chinese citizens was raised to 2000rmb. I'm not sure if that's news for anyone within a Chinese spouse...
Thanks for the figures skiing
I had seen a very similar table but the alignment was skewed, and the explanation confusing... hence my incorrect information.
BTW, the rates continue to go up beyond the 4 bands shown there for high income earners.
Interesting to hear about the part time employment tax situation. Thanks too.
LFA |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Sat Apr 12, 2008 3:46 pm Post subject: |
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| Wonderful Yunqi!! wrote: |
I appreciate the responses.
Here's a new twist - which is better tax wise, 2 pt jobs or 1 ft position?
Beyond that, I was told the other day that the 4800 base and incremental rates were only applicable to Full-time teachers. PT teachers have to pay a 16% flat rate on all income paid. |
Any income earned from an employer other than the one who sponsors your work permit is supposed to be taxed at a flat 20%. |
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Saiops
Joined: 11 Jun 2007
Posts: 11
Location: Beijing,
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| Posted: Mon Apr 21, 2008 3:03 am Post subject: Check IRS RULES |
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I believe that the US and CHina made an agreement about taxing educators withing first 3 years. Double check this. This only applies for US working in China/Chinese citizens working in the US. You don't need to pay for the first 3 years, after that it goes according to tax rules of the country.
We found this out a little to late, after we brought this up to the PSB, they said they made a mistake, but didn't refund the money, they just stopped taking it.
You will need to show them the rules, and maybe bring it up to the PSB attention, its an international agreement made in the late 90's |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Mon Apr 21, 2008 5:33 am Post subject: Re: Check IRS RULES |
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| Saiops wrote: |
I believe that the US and CHina made an agreement about taxing educators withing first 3 years. Double check this. This only applies for US working in China/Chinese citizens working in the US. You don't need to pay for the first 3 years, after that it goes according to tax rules of the country.
We found this out a little to late, after we brought this up to the PSB, they said they made a mistake, but didn't refund the money, they just stopped taking it.
You will need to show them the rules, and maybe bring it up to the PSB attention, its an international agreement made in the late 90's |
Actually, that concept doesn't exist. What does exist is a tax treaty eliminating double taxation. Taxes paid in China can be deducted directly from your tax liability, if any, to the IRS. |
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The Noodles
Joined: 24 Aug 2005
Posts: 202
Location: China, Chengdu
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| Posted: Tue Apr 22, 2008 7:43 am Post subject: |
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| Quote: |
Last week I visited the Chinese government Inland Revenue Department
and was told the following:
First you deduct 4,800 RMB from 7,000 RMB and then from the balance
you look at the following table to get the right percentage to be deducted:
Below 500 5% 0
500 - 2000 10% 25 RMB
2000 - 5000 15% 125 RMB
5000 - 20000 20% 375 RMB
After that you deduct the figures on the right hand side accordingly for
the total amount of income tax to be deducted.
Please correct me if I am wrong. |
So if i have this right, I works out like this:
15000-4800= 10200
that falls into the 20% band
so...
I do 10200-375=9825
then 9825+10200=14625
So my net would be 14625... I got that right? |
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The Noodles
Joined: 24 Aug 2005
Posts: 202
Location: China, Chengdu
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| Posted: Tue Apr 22, 2008 9:45 am Post subject: |
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| Quote: |
Last week I visited the Chinese government Inland Revenue Department
and was told the following:
First you deduct 4,800 RMB from 7,000 RMB and then from the balance
you look at the following table to get the right percentage to be deducted:
Below 500 5% 0
500 - 2000 10% 25 RMB
2000 - 5000 15% 125 RMB
5000 - 20000 20% 375 RMB
After that you deduct the figures on the right hand side accordingly for
the total amount of income tax to be deducted.
Please correct me if I am wrong.
So if i have this right, I works out like this:
15000-4800= 10200
that falls into the 20% band
so...
I do 10200-375=9825
then 9825+10200=14625
So my net would be 14625... I got that right? |
So if my calculations are correct, (factoring in that I am Maths dumb hence why after 3 attempts at GCSE, the best I ever got was a D) to answer op's question on 7000rmb salary, this is what we'd need to do...
7000-4800=2200
that falls into the '2000 - 5000 15% 125 RMB ' category
2200-125=2075
2075+4800=6875
So Wonderful Yunqi would be earning:
6875 RMB
Am I right? |
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bendan
Joined: 18 Jun 2004
Posts: 739
Location: North China
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| Posted: Tue Apr 22, 2008 2:43 pm Post subject: |
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| The Noodles wrote: |
then 9825+10200=14625
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errr, no.
15000 - 4800 = 10200
10200 * 20% = 2040
2040 - 375 = 1665
15000 - 1665 = 13335
So, if you earn 15,000, you get 13335 after tax.
The allowance for Chinese people is being increased from 1600 to 1800, but I don't know if that means the foreigners allowance will also move up by 200, to 5000. |
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