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Posts: 1300

Shifu

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Q: China no longer collecting our income tax?

Recently my company told me my income tax will no longer be deducted from my salary, which basically means my take home salary per month suddenly increased. They said the reason is because the rules changed recently regarding foreign income tax. Any ideas about why China doesn't want our income tax? I'm not complaining, just wondering. 

8 years 49 weeks ago in  General  - China

 
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Posts: 5321

Emperor

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They're still collecting mine, and I can't see Chinese politicians deciding they don't want to take free money anytime soon so I reckon it's just your company. Maybe you never were paying tax.

hi2u:

I was definitely paying tax. I'm talking about the personal income tax. There are still other taxes that are being deducted. 

8 years 49 weeks ago
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8 years 49 weeks ago
 
Posts: 548

Shifu

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Perhaps you should ask them about it in more detail. If they still can not give you a definite answer, you can take a Chinese speaker that you trust to the tax office to discover the truth.

hi2u:

Ya I asked, couldn't get a real reason why it's the case, but I'm not going to go to the tax bureau and ask them why they aren't withholding more of my salary. That works fine for me ha. 

8 years 49 weeks ago
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8 years 49 weeks ago
 
Posts: 1845

Shifu

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I was told because of changes in tax laws my taxes will go up slightly. Do you wanna swap tax schemes?

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8 years 49 weeks ago
 
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Emperor

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Sounds like your company can't employ you legally anymore, so can't provide tax receipts. So they are bullshitting you about the tax office not collecting tax. If you're happy working illegally under the radar then take the tax free cash. Just be very careful....

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8 years 49 weeks ago
 
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Nothing changed for me and it seems weird, I suspect you never paid income tax and someone was putting the difference into its pocket, it's a common scam in Chinese companies employing foreigners.

Hotwater:

Easy way to check that...go to the tax office with a Chinese speaker, contract & passport. 

8 years 49 weeks ago
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8 years 49 weeks ago
 
Posts: 921

Shifu

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Like the others said already, it's plain BS.

There's no any announcement, not even a rumor about it. And no reason for the Chinese govt to do so.

As already suggested, most likely your income tax have never been paid. Remind you that a regular income tax payment is a mandatory condition for sending your hard earned cash abroad, if needed (unless you use a Chinese person for this and limited to a max of 50k USD/year).

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8 years 49 weeks ago
 
Posts: 1300

Shifu

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I'm definitely employed legally with residence permit and also get the tax slips every month. My company is a foreign company and is fairly large and employs other foreigners so I have no reason to doubt they've been pocketing my tax money all this time and then suddenly decided to stop doing that. Like I said though I'm not complaining about it, just curious.

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8 years 49 weeks ago
 
Posts: 470

Governor

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I am pretty sure that Personal Income Tax for foreigners was not canceled in 2015.

But there are discussions about raising the threshold (but it did not happen yet).

If your salary is reasonably high so there is no legal way how to avoid paying the personal income tax.

If your officially declared salary is on lower level so the point can be:

Monthly taxable income = Monthly income – RMB 4,800 (Standard deduction for expats) – Allowances

Among tax deduct able allowances belong:

a) Allowances for housing, meals, relocation and laundry expenses 

b) Relocation expenses upon commencement or cessation of employment in China 

c) Reasonable business travel expenses and two personal trips to the individual’s country of origin 

d) Reasonable allowances for language training and children’s education 

 

So you may theoretically end up paying no taxes if your salary is low. 

If you work for foreign company so I assume they should be able to explain you in details what is the reason behind and eventually show you the related resolution based on which you now do not have to pay income tax.

hi2u:

Good to know, but my income is not low by any means. Could be because my company is foreign owned and the laws governing taxes for foreigners in foreign companies changed is my guess. 

8 years 49 weeks ago
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gouxiong:

I am almost sure your guess is not correct.

The ownership is not important. The legal form is important and then your position (I mean employee or legal representative).

But in case you have a regular employment contract in China so you are subject to China tax legislation.

There is nowhere mentioned that wholly foreign owned companies employees are exempted from income taxes - you can trust me - I also work for foreign company and still pay the income tax.

Even though your company would be just representative office so there would be the obligation for you to pay the income tax.

I really assume that the most probable case is that your company messed up something because it's hard to imagine they would not know the current legislation.

However pls keep in mind that we are now talking just about your income in China. If your company is doing 'tax optimization' and splits your income into the China part and foreign part so your Chinese part may fall into tax free zone. But this is highly grey area (not necessarily illegal but easily can be - depends on the given situation) and I assume it would be consulted with you upfront.

Otherwise if found out you are not paying income tax can have quite bad consequences for you later.

8 years 49 weeks ago
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8 years 49 weeks ago
 
Posts: 1153

Shifu

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no taxes really

Hotwater:

Is that a statement or a question?

8 years 41 weeks ago
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8 years 41 weeks ago
 
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