Reply To: Taxes for Expats working in China

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Foreigners working in China pay tax on their monthly wage minus 4,800 RMB; if your monthly wage is 10,000 RMB, a total of 5,200 RMB will be taxable.

Your non-taxable income is then taxed according to a progressive tax rate of 3 percent up to 45 percent, depending on your level of income. At the time of writing, the following rates applied for taxable incomes:

3 percent for less than 1,500 RMB

10 percent for 1,500 to 4,500 RMB

20 percent for 4,500 to 9,000 RMB

25 percent for 9,000 to 35,000 RMB

30 percent for 35,000 to 55,000 RMB

35 percent for 55,000 to 80,000 RMB

45 percent for more than 80,000 RMB

90 days, one year, five years

If the tax companies had left the rules there, it would have been too simple. How long you stay in China also affects how much tax you pay, and on what kind of income you are required to pay tax. Here’s a brief breakdown:

90 days

A foreigner who works in China for less than 90 days in a year (from January 1st to December 31st) only has to pay tax on income paid by Chinese companies for work done in China. In some cases, a bilateral agreement between your country and China can extend the 90 day period to 183 days.

90 days to one year

A foreigner resident in China from between 90 days to one year has to pay tax on all income earned within China, regardless of whether it is paid by foreign or Chinese companies.

One year to five years

Those resident in China for one year to five years pay tax on all income except that paid by foreign employers for work done outside of China.

More than five years

Those resident in China for more than five years may end up complying to the same tax rules as Chinese residents.

Paying even more tax

Depending upon the laws of your country, you may have to pay tax in your own country even while living and working in China. This situation might be avoided if your country has a bilateral tax agreement with China, or if your government does not require citizens living abroad to pay tax.