Job Discussion Forums

[ymmv]

We have been through this again and again over the years in various threads so let me try to put this to bed for once and for all. Maybe they'll make it a stickie!

The current threshold for taxable income for foreigners in China is 4800 RMB. Period. Full stop. That's it.

The basic individual tax LAW of China written in 1994 http://www.chinatax.gov.cn/n6669073/n6669088/6888498.html provides at Article VI that everyone (you, me, and all 1.5 billion Chinese) are entitled to a monthly deduction of 800RMB.

The basic individual income tax REGULATIONS written in 1994 http://www.chinatax.gov.cn/n6669073/n6669088/6888494.html provides in Articles 26, 27, and 28 an additional "reduction" to foreigners of 3200 RMB.

These two items are separate, but together they entitled foreigners to a "tax-free" threshold of 4000 RMB (800+3200). That was so from 1994 until January 1st, 2006.

Beginning January 1st, 2006 the amount in the tax LAW (i.e. 800 RMB) was amended to 1600 RMB. The tax REGULATION was not amended. Thus after January 1, 2006, a foreigner enjoyed a tax threshold of 4800 (1600+3200).

Early this year and effective with the pay period beginning March 1, 2008 both the tax LAW and tax REGULATION were amended.

Article 6 of the tax LAW was amended to raise the general deduction for everyone (you, me and 1.5 Chinese) to 2000 RMB per month.

Articles 26, 27 and particularly 28 of the tax REGULATION were also amended and the 3200 RMB foreigner allowance was reduced to 2800 RMB.

Thus, the tax threshold for foreigners remained at 4800 RMB (2000+2800). In other words, no net change for foreigners since January, 2006.

Those amendments can be found here (in Chinese): http://www.chinatax.gov.cn/n480462/n480513/n480902/7515970.html

These are from the official website of the State Administration of Taxation.

I also saw this in a hard copy of Taxation In China published in September of this year and for sale now in my university's bookstore.

So there you have it - not only the answer, but the how and why for the answer.

YMWNV

[ymmv]

Just to keep all the tax info in one place, here's a synopsis of how to calculate your tax which I previously posted in another thread. You can read my full remarks at that thread:

http://forums.eslcafe.com/job/viewtopic.php?p=706573#706573

Foreigners pay tax only on their salary in excess of 4800 nationwide since January 1, 2006. Thus, their "taxable income" is (Salary less 4800).

Take the "taxable income" and look at the tax table. Actually, the tax bureaus have provided two tax tables to make the calculation easier due to the progressive rate nature of the calculation.

Table One - The Offical Tax Table:
1 Taxable Income of 500 yuan or less -- 5%
2 That part of taxable income in excess of 500 to 2,000 yuan -- 10%
3 hat part of taxable income in excess of 2,000 to 5,000 yuan -- 15%
4 That part of taxable income in excess of 5,000 to 20,000 yuan -- 20%
5 That part of taxable income in excess of 20,000 to 40,000 yuan -- 25%
6 That part of taxable income in excess of 40,000 to 60,000 yuan --30%
7 That part of taxable income in excess of 60,000 to 80,000 yuan -- 35%
8 That part of taxable income in excess of 80,000 to 100,000 yuan -- 40%
9 That part of taxable income in excess of 100,000 yuan -- 45%

Let's take a typical example:
Say you're making a straight salary of 11,000 a month (doesn't include meal allowances, phone allowances, etc. etc.) We can calculate the tax as follws:
Income (11,000) - Standard deduction (2000) - Foreigner Deduction (2800) or more simply 11,000 - 4800 = 6200 TAXABLE Income.
Applying the tax table, the first 500 is taxed at 5%, the next 1500 at 10%, the next 3,000 at 15% and the last 1,200 at 20%. Like this:

Taxable Income X Tax Rate
500 x 5% = 25 (First 500)
1500 x 10% = 150 (Excess over 500 up to 2000 = 1500)
3000 x 15% = 450 (Excess over 2000 up to 5000 = 3000)
1200 x 20% = 240 Excess over 5000 = 6200-5000 = 1200)
6200 -------------- 865 Tax Due

But the Tax Bureaus provide an additional Quick Calculation Tax Table which makes calculation much easier. It takes into account the varying marginal tax rate levels so you need only perform a one time calculation of your "taxable income" times the highest marginal rate your taxable income falls into, and then subtract a Quick Calculation Deduction that adjusts for the lower rates. Here's the Quick Calcualtion Tax Table:

Taxable Income --- Tax Rate (Quick Calc Deduction)
Less than 500 5% (0)
500-2,0 10% (25)
2,000 - 5,000 15% (125)
RMB5,000 - 20,000 20% (375)
20,001 - 40,000 25% (1,375)
40,001 - 60,000 30% (3,375)
60,001-80,000 35% (6,375)
80,001-100,000 40% (10,375)
RMB100,000 + 45% (15,375)

Let's run the same 11,000 salary through this table.
Taxable Income = 11,000 - 4800 = 6,200
Looking up 6,200 Taxable Income, we see it falls in the 20% tax bracket.
6200 x 20% = 1240
1240 less the Quick Calc Amount for the 20% bracket (375)
1240 - 375 = 865 Tax Due

Same result.

And that's how you do it.

[mike w]

It's much easier to be paid in US dollars - no tax.

[ymmv]

[Songbird]

Please make this a sticky!

[arioch36]

Well this wasn't made a sticky, so a good bump is in order.

My school is actually deducting taxes, just not giving me the tax receipts (ha ha y do they always want to fight over what they will lose ?)

I am fairly sure that the 200 they give for utilities does not fall under taxable income. What the school gives you for expenses is not taxed (pretty sure)

Here's my question for you intelligent ones out there. I know our housing is not taxed. The school takes out 900 a month from my salary for an apartment the rent, that I am subrenting. So my opinion is that since this 900 I am not being paid is for housing, it should not be included in my taxable salary???

PS The school's name is on the lease, I have no contract about the apartment, the school just takes out an extra 900 ( the apartment is 1900 a month)

[Ms Bean]

Good Question. In the states, it would be considered taxable.

[wulfrun]

Great thread, thanks.

Currently in the UK, I've done some copy-editing for a Beijing publisher (over the space of 6 weeks), and they've now announced my pay as: "3,550 RMB gross, with a tax deduction of 550, so 3,000 net." They're under-paying me anyway, which I'll dispute, but the tax also seems to be a fabrication - since this thread suggests that foreigners are only taxed after the first 5,200 a month, and I've only been ascribed 3,550.

But does anyone know if there are different rules for people not in China? I've been in Europe for the duration of the work, and don't currently have a Chinese visa.

Thanks

edited - realised thanks to a helpful pm that i'd written the figures down wrong

[kev7161]

Save yourself a headache and negotiate for a NET salary on your contract. Let the school pay (or not pay, whatever) the tax to the government.

[wulfrun]

delete

[ymmv]

It is NOT 5200-it's 4800! And the links are here in this thread!

GRTFT!

Also, as you're not in China as you state in your original post, the foreigner exemption probably doesn't apply to you.

[wulfrun]

[ymmv]

When I wrote the original posts on THIS thread, I also went back to the old tax posts and posted a meesage pointing to this post and the updated information.

What would be really helpful is if whoever started that original post about 5200 would go back and edit the title because it seems that number seems to stick in a lot of peoples' minds and they don't bother to wade through that whole thread....which points to this thread to answer the question.

What would be really, REALLY helpful is if people would RTWFTs.

[wulfrun]

[bendan]

Thanks to ymmv for putting such effort into this great summary.

I'm bumping this up as I came across an online calculator you can use to check you are paying the right amount (or to do some "what if" calculations).

http://chinajobline.com/index.php/tax-calculator.html