Depending on your home country, citizens living abroad may be able to exempt a portion of their earnings from taxes in their home country. U.S. citizens, for example, don’t pay U.S. taxes on income below US$95,100. Anything above that amount, however, will be taxed in the U.S. These countries will require that expatriates file income tax returns for each year they spend abroad. China currently has signed the Double Taxation Prevention Treaty with nearly 70 countries which means that most people will never have to pay tax at both home and abroad.
Because every country has different tax policies for citizens who live abroad, the safest way to clarify your tax situation is by consulting with your native tax office or an international tax firm familiar with international tax laws.
As for the Chinese income tax, employers will usually withhold income tax on your behalf and deduct that from your salary. Your employer is obliged to issue you a tax receipt, which is necessary should you need to transfer money abroad.
China’s State Administration of Taxation uses a sliding scale for income tax, ranging from five percent to 45 percent depending on income level. If your monthly wage is between 4,501- 9,000 RMB, you will be taxed 20 percent. Or, if you earn 9,001- 35,000 RMB per month you can be taxed at 25 percent. These scales change slightly from year to year, so it’s safest to check with a tax advisor for the latest regulations.
The following are approximate tax rates (please check with financial advisors for the latest figures):
Individual Income Tax Brackets
|Taxable Income (RMB)/per month||Tax Rate||Quick Deduction|
|500 or less||5%||0|
|Income in excess of 500-2,000||10%||25|
|Income in excess of 2,000-5,000||15%||125|
|Income in excess of 5,000-20,000||20%||375|
|Income in excess of 20,000-40,000||25%||1,375|
|Income in excess of 40,000-60,000||30%||3,375|
|Income in excess of 60,000-80,000||35%||6,375|
|Income in excess of 80,000-100,000||40%||10,375|
|Income in excess of 100,000||45%||15,375|
Use this formula to calculate the approximate tax owed: Tax = (Monthly Taxable Income) x Tax Rate – Deduction
Visit the Beijing Municipal Local Taxation Bureau’s English language webpage for more information.