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Individual Income Tax in China

Updated:2018-4-28 15:29:54    Source:www.tannet-group.comViews:134

Individual income tax in China is required to be paid by all individuals working in China, both Chinese and foreign expats. For Chinese citizens, they must pay individual income tax (IIT) on all income sourced both domestically and overseas (unless stipulated otherwise in a tax treaty), while for foreigners, they are only required to pay IIT on income derived in China in most cases.

Do you need to pay the individual income tax?
To determine whether a foreign individual working in China is subject to IIT, it is necessary to look at how much time he or she has spent in China, what is the source of his or her income, and where his or her employer is based. Following this, consulting with a China taxation specialist can help optimize one’s overall income to achieve the most profitable package for you or your employees.

Taxable incomes for foreign expats in China
1. Living in China less than 90 days (183 days if there is a tax treaty in place)
Income sourced within China;
Income paid by overseas employer (not borne by its Chinese operation) is exempt.

2. Living in China more than 90 days (183 days if there is a tax treaty but less than one year)
Income sourced within China;
Income sourced outside China is not subject to IIT, unless the taxpayer is a director or senior manager of a Chinese domestic enterprise.

3. Living in China between one and five years
Income sourced within China;
Income sourced outside China paid by a Chinese enterprise or individual.

4. Living in China more than five years
Income sourced within and outside China from the sixth year onwards for eery full year spent in China.

How much should you pay for IIT?
Individual income tax in China is levied at a progressive rate. The formulas for calculating an individual’s tax payable are:

Monthly taxable income = Monthly income – RMB 4,800 (Standard deduction) – Allowances
Tax payable = Monthly taxable income × Applicable tax rate – Quick calculation deduction

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If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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