As a foreigner live and work in China, knowing how to pay tax is very important. It's not only a duty but also affect whether you can get work permit or not.
What's Individual Income Tax?
It refers to individuals who have domicile in China or not domiciled but reside in China with the personal income sourced from China or outside China.
In accordance with relevant regulations, the expense deduction standard for foreign personnel is 4,800 RMB. Individual Income Tax is calculated based on personnel income gaining. Higher income, higher tax rate.
How It Affect Wok Permit?
According to the latest Visa Policy, foreigner who intends to work or invest in China can get Work Permit if someone meets one of the following requirements:
Bachelor or above degree and work experience ≥2 years.
Monthly salary ≥28,000 RMB.
≥60 points according to Points based system.
(check your points via HACOS Wechat mini program.👇)
Are You Qualified For China Z-visa! This 1-Min Test Can Tell!
It seems that meeting the second requirement appears to be much easier for our foreign friends. That is, earning at least 28,000 RMB a month means you need to pay tax in equivalence to get your Work Permit in China. So specifically, how much tax you should pay? Let’s see!
How to Calculate?
Individual Income Tax Rate
(For Foreigners)
Notes:
(Per month) Tax payable income = income without tax - 4,800 (expense deduction standard);
Make sure the tax rate and quick calculating deduction amount accordingly by the range of income;
(Per month) Tax payable = taxable income * applicable tax rate - quick calculating.
For Example
Pay Tax With Income From
Tax Depends On Your Duration In China
For those foreigner personnel who works in Chinese mainland, the liability of tax depends on your duration in China and the specific circumstances of the working agency.
01
Less Than 90 Days
Only gaining income from your work in China needs individual income tax paying (from 1st Jan to 31st Dec). Under specific circumstance, your duration of residency in China can be extended to 90-183 days based on the bilateral protocol.
02
90 Days to 1 Year
All kinds of income gained from Chinese companies or foreign firms in China need tax paying.
03
1 Year to 5 Years
Individual income both from Chinese and foreign firms during residency need to declare Individual Income Tax.
If you gain income both in China and outside China, there will be a combined tax calculation for domestic and overseas income. And you should declare tax payment within the time limit as set in the Tax Law for their monthly payable tax.
04
More Than 5 Years
The year after a five-year residency, you need to declare tax payment with all of your income both from China and outside China if there is a year-round residency, or merely income from China if there is less-than-one-year residency.
More Taxes You May Need to Pay
However, if there is a bilateral protocol about taxation of China and your country, or if government of your country has no requirement of tax paying for citizen living overseas, you may have no need to pay extra tax!
After knowing the details of Individual Income Tax for foreigners, can you figure out how many Individual Income Tax you should pay exactly in a month?
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