Taxes are something that touches every one of us in our daily lives. If you are a foreigner who works in China or may be planning to start a business, here are the three main taxes you should know about.
Personal income tax refers to the tax levied on an individual's income from various forms of income. In China, individual income tax payers include individuals who reside in China and derive income from China, as well as individuals who do not reside in China and derive income from China.
2. How to calculate
1. Calculate the taxable income amount
Taxable income = monthly income - Five insurance and one fund - special additional deduction - threshold (5000 yuan)
2. The tax rate is then calculated using the resulting taxable income tax multiplied by the corresponding applicable tax rate.
| # | Tax payable | Rate（%） |
| 1 | ≤3000 | 3 |
| 2 | 3000~12000 | 10 |
| 3 | 12000~25000 | 20 |
| 4 | 25000~35000 | 25 |
| 5 | 35000~55000 | 30 |
| 6 | 55000~80000 | 35 |
| 7 | ＞80000 | 45 |
VAT is an indirect tax based on the value added of goods or services, which is mainly used to regulate the production and consumption of goods and services in order to promote economic development.
In China, VAT payers include units and individuals that sell goods, provide services, intangible assets or real estate, and units and individuals that import goods.
If the quarterly turnover of the company is more than 300,000 yuan, the tax rate is 1%, otherwise, there is no need to pay VAT.
Profits tax is a tax levied on assessable profits in the year of assessment, mainly on income (other than profits on capital gains from the sale of assets) derived from or derived from Hong Kong by an individual or enterprise carrying on any trade, profession or business in Hong Kong.
The standard rate of corporate income tax in Hong Kong is 16.5%. But for small businesses, if the profit does not exceed HK $2 million, the tax rate will be halved to 8.25%.
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