Shanghai Tech Writer

I’m currently in the U.S. for 5 weeks because of a particular “clause” in China’s income tax law that requires foreigners to pay tax on his or her worldwide income. According to the law, or so I’ve been told by numerous sources, foreigners who have lived in China continuously for more than five consecutive years must pay income on all worldwide income. The only way to prevent Uncle Mao from taking a piece of your dough is to exit the country for more than 30 consecutive days. I’ve been searching the internet for an actual published (and official) statute regarding this tax law but have not found anything other than comments from other foreigners living in China. The best I found was the following, a response from a “consultant”:

“Once an expatriate individual has lived in China continuously for more than five consecutive years, he or she must pay individual income tax on his or her worldwide income, i.e. all income derived from within and from outside China, for every full year spent in China, beginning in the sixth year.

For individual income tax purposes, an individual is considered to have been resident in China continuously for five years if he or she has been present in China consecutively for a full year in each of the past five years, excluding temporary absences of less than 30 days on a single trip or an aggregate period of less than 90 days in a calendar year. It means in any calendar year of the 5 years, if the individual stayed outside of China for more than 30 days on a single trip or an aggregate period of more than 90 days, the 5-year residency will be broken.”

There was another response stating that China’s State Administration of Tax actually have never collected on anyone’s worldwide income yet, but they certainly have the power and authority to do so. It is best not to test your luck by avoiding the tax mandate. The tax mandate doesn’t “require” you to leave the country if you don’t want to. If you don’t have any income outside of China, or if you don’t mind paying more China taxes, you don’t have to leave the country.

I sold all my pre-IPO stock options from my previous employer after I resigned and that was worth quite a bit (even though the company is not doing too great right now). We (as in the people who worked their butts off before the company went IPO) were all expecting to be millionaires but we were 2-digits short of that. I was just a teacher and didn’t care much about the options, so when I sold them (6 years later), it actually paid for the downpayments of a nice house in Shanghai! Aside from that, I’ve made/am making a killing from several Chinese stocks (traded on the NASDAQ/NYSE). And Uncle Mao wants some of it back. That is why my husband and I are in U.S. for over a month!

Next week, our time will be up and we’ll be returning to Shanghai. My first official day of work will be the following Monday. I’m quite eager and really looking forward to starting the technical writing job. While most people are more than happy to take an extended vacation, I have been on vacation way too long — almost 4 months! (2-months paid summer vacation plus 6 weeks for “tax evasion”) I look forward to working at NI and actually having work-related things to blog about.

(No Ratings Yet)

 Loading ...

  Subscribe to RSS feed       Subscribe via e-mail