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Q: Question regarding a work contract
Hi there,
I have a friend that started to work for a company that is declaring a lower salary on the work contract than the official income. Other people working in the company told him the company is gonna pay the salary in full as agreed and that this is just a way to lower the tax.
How safe is that? I've read in some news Chinese gov. was doing efforts in cracking down on tax fraud done by foreign individuals.
8 years 36 weeks ago in Business & Jobs - China
Most companies in China break the law in some way. Whether the company gets in trouble is largely dependent on its connections with the tax department. If they have friends in the right places avoiding taxes should be fairly easy to get away with.
Yes it is common practice for Chinese companies to pay a portion of the salary in cash to lower the required taxes to be paid. That's why you always see long lines of people at the atm depositing cash. I doubt there's much the tax bureau can do if your company actually pays taxes on the salary declared on the work contract.
You should be wary.
The Chinese govt are wealthy and local companies can easily get away with cheating the system, making it common practice. However a certain minor proportion of Chinese people have some kind of victim/insecurity/nationalistic mentality. This means in a tax office of hundreds you only need one douche to make it their life's work to catch you out.
lewn:
You muppets can down vote me as much as you like, but fact is a foreigner is about 500% more likely to be chased up for tax than a Chinese person.
So the people you are working for are doing what they think is common practice by lying about your salary so you pay less tax. The reality is you are much more likely to be caught out because the are simply plenty of people working for the tax bureau, and a small minority of these people have a problem with foreigners, and don't want any foreigners cheating the system, making you far more of a target than a local. Maybe they feel Chinese living overseas pay too much tax so they are trying to even the score, I'm not sure.
I've been chased up a few times, by an overzealous tax worker demanding paperwork though seeming without the legal right to actually obtain them, even though where I'm working we are not bending the rules.
Shining_brow:
I do not doubt this post... Chinese love to make the foreigner out to be oh so much worse than the locals - even though the absolute total proof is that this is not true! (no, not saying that foreigners aren't evil - some are, and some aren't. But, Chinese avoid taxes and laws like the plague - it's how the culture/society is organised - and taught).
Here, if 2 people are caught doing the same crime - one foreign, and the other Chinese - there's an EXTREMELY high likelihood that the foreigner will be pounded to death in the media, and calls will be made for ALL foreigners to get kicked out. this is not true for ALL 'crimes' - and there are certainly cases where we can get away with a LOT more than a local...
But for tax - it will be OUR fault, and not the company's fault.
shiruba:
So they really do check. I've been working here for 5 years and never had any issue
When they're investigating, what kind of documents were they asking? Bank statement?
lewn:
One city isn't another. What might happen one place doesn't necessarily mean that's what happens everywhere, also you only have to see the Chengguan to see that you can get away with something for years, then suddenly one day 'no go'. Also your situation also depends on how much guanxi the people you work for have.
So has anyone ever heard of a foreigner being investigated on? We all feel there could be a potential risk, but I've been here for 5 years and have never heard of any issue like that.
lewn:
As i said before I was investigated, this b***h tried to get her teeth in a few times, but didn't seem to actually have the authority to do anything. In the end I just asked the boss to ask her what her problem was, as we weren't cheating the system anyhow. She said she wanted to see pay-slips and my bank book or bank statements, I said, OK if you give me a break down of the tax I've paid whole time I've been paying in China in case I can claim it back in my home country. She said 'no' so I said 'no', been about a year since then.
So it seems that they have to convince the cops to help them do anything, and for that they probably need some kind of evidence you are doing something wrong. Otherwise they'll just ask you to put your head in the oven voluntarily.
I don't really agree with above.
How can employee be responsible, if employer doesn't fulfill tax obligations?
I can't ask School's accountant if she paid tax on my pay last month, because she doesn't speak English.
I receive my salary by the Contract with deduction of 200 and something Rmb, which is tax as it was explained to me.
If anybody must be investigated, it must be the employer, not employee. Lots of smoke here.
Hotwater:
If they are deducting 200/month then I'd say your salary is about 9000/month.
How do I know that?
http://www.sjgrand.cn/individual-income-tax-calculator
As shining_brow mentioned, any violation of Chinese law is the foreigners fault. End of story.
