How Much Tax Do You Have to Pay?
After a long long discussion, Law of the PRC on Individual Income Tax (“IIT Law”) has finally been promulgated at June 30, 2011 and here is an answer to your question of "How Much Tax Do You Have to Pay?".
According to Chinese law, two types of expats should pay Individual Income Tax (IIT)
- For expats who stayed within the territory of China more than one year, they shall pay IIT for the income obtained in and/or outside the territory of China ;
- For expats who do not stay within the territory of China or have stayed within the territory of China for less than one year, they shall pay IIT for the income obtained within the territory of China.
In other words:
An English Speaking Chinese Lawyer explains the IIT in China like this:
If you are working in China this year and worked there all of last year, then your global income is now subject to PRC tax! So if you had income from both inside and outside of China, the Beijing tax man wants a taste of the action! But there are some things to consider if you have non-China-based income:
you also may have tax exposure outside of China in that jurisdiction.
ideally the two nations have a tax treaty so you don't need to pay twice!
even if they have a tax treaty, you may need to still file, if not pay, in both locations.
If you have to pay personal income tax in China, how much do you owe?
Foreign employees should pay IIT according to the rates listed as following:
Grade
1
2
.
3
.
4
.
5
.
6
.
7
Monthly Taxable Income
income of 1,500 yuan or less
that part of income in excess
of 1,500 to 4,500 yuan
that part of income in excess
of 4,500 to 9,000 yuan
that part of income in excess
of 9,000 to 35,000 yuan
that part of income in excess
of 35,000 to 55,000 yuan
that part of income in excess
of 55,000 to 80,000 yuan
that part of income in excess
of 80,000 yuan
Tax Rate %
3
10
.
20
.
25
.
30
.
35
.
45
Note:
- The monthly taxable income in this Schedule refers to the balance after deducting 3,500 Yuan and additional expenses from the monthly income;
- the above mentioned additional expenses may be determined in light of the foreign taxpayer’s average income level, living standards and the change of exchange rates, the scope and standards for which shall be formulated by the State Council.
