Tax In China

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in China is complying with the country’s tax system. As well as paying tax in China, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income: 

If you’re working in China under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in China for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in China, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in China through PAYE is left with the prospect doing everything themselves.

Do you know much about Chinese Tax Law? Does China have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in China can range from 3 to 45 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in China, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax : 

Contractors in China are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Chinese umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Chinese taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Chinese tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in China, many of whom are experts in tax and immigration laws. If you have any questions about tax in China, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Chinese work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in China but without the overhead of directly dealing with the Chinese tax authorities. Get in touch with us today for some reliable advice on tax in China!

When Do You Need to Lodge Your Tax Return?: 
31 March of the following year
Tax Filing Deadline : 
31 March of the following year
Can you file it online? : 
Yes, http://www.tax.sh.gov.cn/zrr/ for Shanghai
Currency: 
Renminbi or Chinese Yuan (RMB/CNY)
Tax-free Threshold in: 
None
Grossed Income: 
0 - 1,500
Tax Rate: 
3%
Grossed Income: 
>1,500 - 4,500 (CNY105 deduction)
Tax Rate: 
10%
Grossed Income: 
>4,500 - 9,000 (CNY555 deduction)
Tax Rate: 
20%
Grossed Income: 
>9,000 - 35,000 (CNY1,005 deduction)
Tax Rate: 
25%
Grossed Income: 
>35,000 - 55,000 (CNY2,755 deduction)
Tax Rate: 
30%
Grossed Income: 
>55,000 - 80,000 (CNY5,505 deduction)
Tax Rate: 
35%
Grossed Income: 
>80,000 (CNY13,505 deduction)
Tax Rate: 
45%
How long does it take to set up: 
7 days
How much does it cost: 
CNY300
Is it easy? : 
Starting a Business Rank: 93/190 (Source: World Bank)
How to File Taxes in: 

Taxes can be filed online for most cities in China. Each city has their own online portal or software for tax filing. It is recommended that you consult a translator as all websites are in Mandarin.

Step 1: Register

The links below will allow you to register for tax filing, based on your location.

Beijing 

Shanghai

Shenzhen 

Guangzhou 

Tianjin

Hangzhou 

In Beijing, Guangzhou, and Tianjin taxpayers are required to download tax filing software.

Step 2: File Taxes

Log in to the online tax filing portal for your city via the links below.

Beijing 

Shanghai 

Shenzhen 

Guangzhou 

Tianjin 

Hangzhou 

Notes: 

Standard Deduction: A standard deduction is subtracted every month from the amount of tax on gross monthly income, so that:

Monthly Tax = Gross Monthly Taxable Income x Tax Rate – Deduction

To calculate gross monthly income from net monthly income:

Gross Monthly Income = (Net Monthly Income - Deduction) / (100% - Tax Rate)

Tax Rates: Non-residents and residents are subject to the same tax rates.

Does the 183 day rule apply in: 

No

When do you become a tax resident in: 

You become a tax resident in China when:

  • You are domiciled in China i.e. you habitually reside in China by reason of your permanent registered address, family ties, or economic interests; or
  • You are a non-domicile of China and you live in China for 365 days, without a single period of absence of more than 30 consecutive days, or cumulative periods of absence of more than 90 days within the same calendar year.

An individual with a Chinese passport or ‘hukou’ (household registration) is generally regarded as domiciled in China. A foreign national is generally regarded as a non-domicile of China.

Am I taxed on my global income in: 

You are taxed on your global income if you are:

  • Domiciled in China;
  • A non-domicile of China who has resided in China for more than five consecutive ‘full’ years and your global income will be taxed from the 6th year onwards; or
  • A non-domicile of China who has resided in China for more than 1 year but less than 5 consecutive ‘full’ years and your global income will only be taxed to the extent of income paid by a Chinese entity.

You are taxed on your China-sourced income only if you are:

  • A non-domicile of China and you have lived in China for less than 1 year.

You are tax exempt if you are:

  • A foreign individual who travels in China and derives income from an overseas employer with no permanent establishment in China; and

You do not physically stay in China cumulatively for more than 90 days in a calendar year (or 183 days/365 days if extended by a tax treaty).

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