China Company Tax Filing Services
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Tax is a most important topic investors are concerned and interested. For foreign investors, here is the brief overview of taxation in China.
What is Monthly Taxable Income?
According to the Individual Income Tax Law of the PRC, the minimum tax threshold for foreign nationals working in China is normally 4,800 yuan. Income up to this level is not taxed. A progressive tax rate is applied to all income earned above the 4,800 yuan threshold. See the table below to work out your Monthly Taxable Income.
Steps to calculate income tax
● Work out your monthly taxable income. Monthly taxable income = Total monthly salary minus 4,800 yuan.
● Find the relevant tax rate and “quick deduction” for your monthly taxable income.
● Divide the tax rate by 100 to convert it from a percentage to a decimal.
● To work out how much tax you are liable to pay, multiply the decimalized tax rate by your monthly taxable income, and then subtract the “quick deduction.”
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Example to calculate the income tax
Suppose you are a foreigner earning 10,000 yuan per month in China:
● Monthly taxable income = 10,000 yuan minus 4,800 yuan = 5,200 yuan
● With a monthly taxable income of 5,200 yuan, you are taxed at a rate of 20 percent. Your “quick deduction” is 555 yuan.
● Convert the tax rate from a percentage to a decimal: 20/100 = 0.2
● Work out your final tax liability: (0.2 x 5,200) – 555 = 485 yuan
● As your employer will deduct your 485 yuan Individual Income Tax from your salary, your final salary after tax will be 9,515 yuan.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s websitewww.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to anitayao@citilinkia.com.