{"id":1350,"date":"2023-10-24T03:59:19","date_gmt":"2023-10-23T19:59:19","guid":{"rendered":"https:\/\/www.hiredchina.com\/articles\/2023\/10\/24\/a-brief-guide-income-taxes-for-expats-in-china-2\/"},"modified":"2024-07-03T17:50:27","modified_gmt":"2024-07-03T09:50:27","slug":"a-brief-guide-income-taxes-for-expats-in-china-2","status":"publish","type":"post","link":"https:\/\/www.hiredchina.com\/articles\/a-brief-guide-income-taxes-for-expats-in-china-2\/","title":{"rendered":"A Brief Guide: Income Taxes for Expats in China"},"content":{"rendered":"

When working in China, it’s vital to understand the income tax system. This way you can ensure your employer is paying you your fair wages, and you can understand some of the legalities involved with paying taxes.<\/p><\/blockquote>\n

When working in China, it’s vital to understand the income tax system. This way you can ensure your employer is paying you your fair wages, and you can understand some of the legalities involved with paying taxes.<\/p>\n

Check out our brief guide below!<\/p>\n

\"tax1.jpg\"<\/p>\n

What is Monthly Taxable Income?<\/p>\n

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According to the Individual Income Tax Law of the PRC, the minimum tax threshold for foreign nationals working in China is normally 4,800 yuan. Income up to this level is not taxed. A progressive tax rate is applied to all income earned above the 4,800 yuan threshold. See the table below to work out your Monthly Taxable Income.<\/p>\n

Steps to calculate income tax<\/p>\n

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\u25cf Work out your monthly taxable income. Monthly taxable income = Total monthly salary minus 4,800 yuan.\u25cf Find the relevant tax rate and \u201cquick deduction\u201d for your monthly taxable income.\u25cf Divide the tax rate by 100 to convert it from a percentage to a decimal.\u25cf To work out how much tax you are liable to pay, multiply the decimalized<\/a> tax rate by your monthly taxable income, and then subtract the \u201cquick deduction.\u201d<\/p>\n

Example to calculate the income tax<\/p>\n

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Suppose you are a foreigner earning 10,000 yuan per month in China:<\/p>\n

\u25cf\u00a0Monthly taxable income = 10,000\u00a0yuan\u00a0minus 4,800\u00a0yuan\u00a0= 5,200\u00a0yuan\u25cf\u00a0With a monthly taxable income of 5,200\u00a0yuan, you are taxed at a rate of 20 percent. Your \u201cquick deduction\u201d is 555\u00a0yuan.\u25cf\u00a0Convert the tax rate from a percentage to a decimal: 20\/100 = 0.2\u25cf\u00a0Work out your final tax liability: (0.2 x 5,200) \u2013 555 = 485\u00a0yuan\u25cf\u00a0As your employer will deduct your 485\u00a0yuan\u00a0Individual Income Tax from your salary, your final salary after tax will be 9,515\u00a0yuan.<\/p>\n

Forms of Taxable Income<\/p>\n

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\u2022 Wage<\/a>s and salaries\u2022 Remuneration for services\u2022 Author\u2019s remuneration\u2022 Royalties\u2022 Interest, dividends and bonuses\u2022 Lease of property\u2022 Transfer of property\u2022 Contingent income\u2022 Other income specified as taxable by the Finance Department of the State Council<\/p>\n

The duration of stay also determines your tax liability<\/p>\n

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How long you stay in China also affects how much tax you have to pay, and on what kind of income you are required to pay tax.<\/p>\n

\u25cf\u00a090 days or below<\/strong>A foreigner who works in China for less than 90 days in a year (from January 1st to December 31st) only has to pay tax on income paid by Chinese companies<\/a> for work done in China. In some cases, a bilateral agreement between your country and China can extend the 90 days period to 183 days.<\/p>\n

\u25cf\u00a090 days to 1 year<\/strong>A foreigner resident who works in China from between 90 days to 1 year has to pay tax on all income earned within China, regardless of whether it is paid by foreign or Chinese companies.<\/p>\n

\u25cf\u00a01 year to 5 years<\/strong>Those residents working in China for 1 year to 5 years have to pay tax on all income, except that paid by foreign employers for work done outside of China.<\/p>\n

\u00a0<\/strong><\/p>\n

\u25cf\u00a0More than 5 years<\/strong><\/p>\n

Residents working in China for more than 5 years may end up complying to the same tax rules as Chinese residents.<\/p>\n

Paying even more tax<\/p>\n

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Depending upon the laws of your country, you may have to pay tax in your own country even while living and working in China. This situation might be avoided if your country has a bilateral tax agreement with China, or if your government does not require citizens living abroad to pay tax.<\/p>\n

Useful Chinese words and phrases<\/p>\n\n\n\n\n<\/colgroup>\n\n\n\n\n
\u7a0e<\/span><\/th>\nshu\u00ec<\/span><\/th>\nTax<\/span><\/th>\n<\/tr>\n<\/thead>\n
\u4e2a\u4eba\u6240\u5f97<\/span>\u7a0e<\/span><\/td>\ng\u00e8 r\u00e9n su\u01d2 d\u00e9 shu\u00ec<\/span><\/td>\nIndividual Income Tax<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

This is for your reference only and please do not hesitate to consult your personal consultant of this field.<\/p>\n","protected":false},"excerpt":{"rendered":"When working in China, it’s vital to understand the income tax system. This way you can ensure your employer is paying you your fair wages, and you can understand some …","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[60,306,937],"class_list":["post-1350","post","type-post","status-publish","format-standard","hentry","category-pro-tips","tag-china","tag-hiredchina","tag-wage"],"_links":{"self":[{"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/posts\/1350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/comments?post=1350"}],"version-history":[{"count":1,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/posts\/1350\/revisions"}],"predecessor-version":[{"id":11856,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/posts\/1350\/revisions\/11856"}],"wp:attachment":[{"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/media?parent=1350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/categories?post=1350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hiredchina.com\/articles\/wp-json\/wp\/v2\/tags?post=1350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}