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Q: How can I avoid Chinese income tax?
I have been living/working in China for a Chinese owned manufacturing company. I am paid in RMB by direct to deposit to my ABC account. The company taxes 35% income tax from my salary. Is there any way around this or to make it less or recoverable at the end of the year?
9 years 43 weeks ago in Money & Banking - Ningbo
Take your passport to the tax office nearest your place of employment and ask for a receipt (to see if, indeed, the full amount deducted is going to the tax office). There are several websites that have Chinese income tax calculators as well.
Please don't ask about dodging the system or for illegal advice...it makes us all look bad.
ironman510:
And now passports and FECs will be linked this year to your bank account (I'll explain later) so you better damn well be paying your taxes..
Robk:
@ironman - Who is to penalize for this? The foreigners who THINK they are paying their taxes or the companies that are lying to their workers and deducting money that they claim is for taxes?
ScotsAlan:
I think my end of year tax statement from Guangdong Government is great. This is what you paid. "Thank you very much for contributing to the growth of our country" Or something like that. Fantastic.
Sinobear:
The visa/tax issue was supposed to be in effect years ago but because of the different systems/software/reporting from place-to-place it never happened. The idea of a national central registry may be in the works.
People individually are responsible for their own taxes and thus it would be your responsibility to take the issue up with your company if they have not been paying taxes on your behalf, not the correct amount, or deducting too much.
Take your passport to the tax office nearest your place of employment and ask for a receipt (to see if, indeed, the full amount deducted is going to the tax office). There are several websites that have Chinese income tax calculators as well.
Please don't ask about dodging the system or for illegal advice...it makes us all look bad.
ironman510:
And now passports and FECs will be linked this year to your bank account (I'll explain later) so you better damn well be paying your taxes..
Robk:
@ironman - Who is to penalize for this? The foreigners who THINK they are paying their taxes or the companies that are lying to their workers and deducting money that they claim is for taxes?
ScotsAlan:
I think my end of year tax statement from Guangdong Government is great. This is what you paid. "Thank you very much for contributing to the growth of our country" Or something like that. Fantastic.
Sinobear:
The visa/tax issue was supposed to be in effect years ago but because of the different systems/software/reporting from place-to-place it never happened. The idea of a national central registry may be in the works.
People individually are responsible for their own taxes and thus it would be your responsibility to take the issue up with your company if they have not been paying taxes on your behalf, not the correct amount, or deducting too much.
35% is way too much, definitely check the tax bureau as suggested and find out how much your company is keeping from your paycheck.
Chinese income tax calculator:
http://www.sjgrand.cn/individual-income-tax-calculator
it opened the other day without VPN...now won't open. But lists the tax bands and calculates your tax if you can open it.
Nessquick:
Thanks a lot, very useful. and without vpn opened just now
If you're paying 35% tax then you should be earning 55000-80000/ month!
ScotsAlan:
If he is getting paid as little as that I hope the job is only part time :-)
dokken:
Nice. Or a troll. One of the two. I don't get jealous of the people who earn more than I do, perhaps except a guy in Shanghai who earned 1.2 million a year in the automotive parts industry. Two years younger than me. What annoys me is all the lame ass pretending that goes on.
ScotsAlan:
Dokken... I know lots of corporates who get paid a fecking lot here. Pollution allowance, 6 flights home a year. Full expenses allowances without fapiao, rent paid etc etc. I am a semi corporate. Local contract. local wage plus a bit for skill, medical insurance etc. I suspect the op is a "Western face" on an M visa being scammed. I pay about 26% of my wage to the Government. And I dont begrudge them a single penny. That money goes to infrastructure. And that infrastucture secures our future. Well ok... maybe. But to try cheat the system makes you a cheat.
35% of your income goes to paying the Chinese government taxes?
What?!
That's insane dude... you need to talk to your embassy or something.
Hotwater:
Do you pay tax here or are you working illegally?
Seee my post above. China has 7 tax bands. 35% tax means the OP is earning 5.5 MILLION to 8 MILLION rmb/year.
It's always the jerks seeming more that try to avoid paying tax. Tax pays for services. These tax avoiders should be taken out, lined up against a wall & shot!
fada:
The same could be said of those paying tax and perpetuating the system of government that is killing china, line em up and shoot em i say
Robk:
@Hotwater - No I don't pay taxes here. I use a spousal visa in which I am not legally allowed to work for or with Chinese people (unless consulting or contractual services). This alone is a jerk thing for the government to do.
They really don't care as long as I don't teach ESL illegally.
I earn money (USD) through my online business with clients 99% outside of China (a few here and there in China but I pay taxes on those if it is RMB). It's not illegal. Do I feel bad about it? Hell no, I formed my own solution to the problem they gave me. What kind of a country allows husbands a spousal visa and then tells them they can't work or provide for the family? Oh, and your math is wrong... it's 660k to 960k per year... not 5.5 to 8mil going by your initial post.
Hotwater:
Don't worry about my maths Rob. I'd just finished a bottle of Bordeux so am half cut!
so you're avoiding tax in any country? Good luck to you. Did you know, that under Chinese law, after 5 years living here you are liable to pay tax in China on your worldwide earnings!
Robk:
@Hotwater - haha, no problem. A good drink or two is needed in China to stay sane.
No, I do pay taxes to an extent... and that is the first time I have heard that law. I assume if they force me to pay taxes on worldwide earnings (as if they could even prove that)... then I would get permanent residency, correct?
I pay them taxes with the transactions I do within China. I have bought an apartment in China and I transfer USD to RMB... so I am pretty certain they are happy.
Besides, I have been audited and came out clean twice. One time when I went to the bank and they said I was a money laundering criminal cause part of my full name came up in the system. Removed and cleared. Second time, when I bought my apartment with my wife and listed as a legal participant. No problem.
This is China afterall...
How can I avoid Chinese income tax?
Easy - quit your job! Once you don't earn any income, you'll no longer have to pay income tax!!
Oh... so you do want some money? In that case, beg plead and grovel to have your pay reduced to about 4800RMb/month!
Sheesh - that was a no-brainer!
Glad I could help... 
INCOME TAX FOR FOREIGNERS IN CHINA
外国人在中国所得税（英文版）
Taxable Income = ( Total Income – Initial Deduction* – Tax Deductible Allowance** )
Tax Payable = ( Taxable Income x Tax Rate ) – Deduction
* Initial deduction is RMB 3,500 for PRC residents and 4,800 for foreigners.
** Tax Deductible Allowance includes rental, food and travel expenses, etc. as determined by your company’s Finance/HR department. You will need to get fapiao (发票) (official invoices) for these figures to qualify as your Tax Deductible Allowance.
Tax Examples
Example 1: Gross Salary of 10K RMB/month
Gross Salary = 10,000
Taxable Income = 10,000 – 4,800 = 5,200
Tax Rate = 20%
Deduction = 555
Tax = 5,200 * .2 –555 = 485 RMB
Example 2: Gross Salary of 10K RMB/month, Tax Deductible Allowance of 2,000 RMB/month
Gross Salary = 10,000
Tax Deductible Allowance = 2,000
Taxable Income = 10,000 – 4,800 – 2,000 = 3,200
Tax Rate = 10%
Deduction = 105
Tax = 3,200 * .1 –105 = 215 RMB
Example 3: Gross Salary of 30K RMB/month
Gross Salary = 30,000
Taxable Income = 30,000 – 4,800 = 25,200
Tax Rate = 25%
Deduction = 1,005
Tax = 25,200 * .25 –1,005 = 5,295 RMB
Example 4: Gross Salary of 30K RMB/month, Tax Deductible Allowance of 15K
Salary = 30,000
Tax Reimbursable Expenses = 15,000
Taxable Income = 30,000 – 4,800 –15,000 = 10,200
Tax Rate = 25%
Deduction = 1,005
Tax = 10,200 * .25 – 1,005 = 1,545 RMB
Naturally, the more your tax deductible allowance, the lower your taxable income and the lesser taxes you pay. So be sure you work out your sums thoroughly before negotiating your next raise or paycheck!
