If you're in China but non-resident - commonly on a Z visa (work permit) or an F visa (business visa) - then you're liable for local tax given the following circumstances:
If you're in China more than 183 days of any 365 day period, you will need to show some local income and pay tax on it. Whereas in the past foreign employees tended to remain employed by their home country entity and avoid Chinese taxation that way, now the rules specifically prevent this.
The exact scope of what will be accountable to tax depends factors including:
- what time of income (salary / dividends / interest / rental income / trust distributions / etc)
- whether the income was derived inside China or outside
- where you are domiciled
- how long you have been in China
- the duration of any trips out of China
- your visa status in China
It can be quite complicated and if you're unsure its best to get advice tailored to your exact situation.
The good news is that there are excellent non-taxable expenses for expatriate workers which can be paid directly by your employer or reimbursed. They include:
- reasonable costs of children's education
- relocation or moving expenses
- accomodation and housing costs
- meals, subsistence and housekeeping expenses
- local transportation
- travelling cost of visits to your home country
Additionally for expats the first RMB4800 per month is tax free.
INDIVIDUAL INCOME TAX (IIT) RATES
Grade | Monthly Salary(RMB) | Tax % | Max deduct at grade
1 | $ < 500 | 5% | 0
2 | 500 < RMB < 2,000 | 10% | 25
3 | 2,000 < RMB < 5,000 | 15% | 125
4 | 5,000 < RMB < 20,000 | 20% | 375
5 | 20,000 < RMB < 40,000 | 25% | 1375
6 | 40,000 < RMB < 60,000 | 30% | 3375
7 | 60,000 < RMB < 80,000 | 35% | 6375
8 | 80,000 < RMB <100,000 | 40% | 10375
9 | RMB > 100,000 | 45% | 15375
* remember as an expat in china your first RMB4800 are tax free.