Personal Income Tax in China for Foreigners

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This entry is part 4 of 5 in the series Living/Working in China

tax calculator I did some research online about the tax system here in China. I also talked to an accountant to find out how income tax is calculated here in China. I’ve put all the information together in this article because I believe many people (foreigners and expatriates) are also wondering the same thing. I also created a simple income tax calculator in Excel that you can download at the bottom of the post.

Tax Rate Chart

Taxable Income Range (RMB) Tax Rate Deduction (RMB)
< 500 5% 0
501-2000 10% 25
2,001-5000 15% 125
5,001-20,000 20% 375
20,001-40,000 25% 1,375
40,001-60,000 30% 3,375
60,001-80,000 35% 6,375
80,001-100,000 40% 10,375
100,001+ 45% 15,375

Tax = ( Taxable Income * Tax Rate ) – Deduction

Taxable Income = ( Total Income – Initial Deduction* – Reimbursable Deduction** )

* Initial deduction is 2,000 RMB for PRC residents and 4,800 for foreigners.
** Reimbursable deduction includes rental, children’s school tuition, language learning costs, home leave travel expenses, business expenses, etc… Not all companies provide this “tax reimbursement” service. You should find out from your employer if your company’s accounting department can apply for tax reimbursement for you and also what kinds of expenses are tax reimbursable.  If you can, then you need to get official government receipts, called “fa piao” (发票) in Chinese, for these expenses and submit to accounting for monthly tax reimbursement.

Tax Examples

Example 1: Salary of 10K RMB/month

Salary = 10,000
Taxable Income = 10,000 – 4,800 = 5,200
Tax Rate = 20%
Deduction = 375
Tax = 5,200 * .2 –375 = 665 RMB

Example 2: Salary of 10K RMB/month, Rent of 500 RMB/month

Salary = 10,000
Taxable Income = 10,000 – 4,800 – 500 = 4,700
Tax Rate = 15%
Deduction = 125
Tax = 4,700 * .15 –125 = 580 RMB

Example 3: Salary of 25K RMB/month

Salary = 25,000
Taxable Income = 25,000 – 4,800 = 20,200
Tax Rate = 25%
Deduction = 1,375
Tax = 20,200 * .25 –1375 = 3,675 RMB

Example 4: Salary of 25K RMB/month, Tax Reimbursable Expenses 16K

Salary = 25,000
Tax Reimbursable Expenses = 16,000  (Flight Home = 10,000 & Rent = 6,000)
Taxable Income = 25,000 – 4,800 –16,000 = 4,200
Tax Rate = 15%
Deduction = 125
Tax = 4,200 * .15 – 125 = 505 RMB

Example 5: Salary of 100K RMB/month

Salary = 100,000
Taxable Income = 100,000 – 4,800 = 95,200
Tax Rate = 40%
Deduction = 10,375
Tax = 95,200 * .40 – 10,375 = 27,705

Example 6: Salary of 100K RMB/month, Tax Reimbursable Expenses 30K

Salary = 100,000
Tax Reimbursable Expenses = 30K  (Rent = 15K, Children’s Tuition = 15K)
Taxable Income = 100,000 – 4,800 – 30,000 = 65,200
Tax Rate = 35%
Deduction = 6375
Tax = 65,000 * .35 – 6,375 = 16,445

Income Tax Calculator

I created a simple income tax calculator in Excel that you can use to calculate your income tax. [download#1#image]

**** IMPORTANT UPDATE (Feb 2010) ****

I apologize, but I am no longer going to respond to any more tax questions. I am not a tax accountant or expert. I’ve already provided EVERYTHING I know on this post, that is, HOW TAX IS CALCULATED. The rest, you’ll have to talk to your company HR or hire an accountant. I have no credentials to provide this kind of service (nor am I paid to do so).

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