Yes, there are taxes here in China, and, yes, you will have to pay them. Thanks to RedLion and a few of the other posters here for the great info on dealing with taxes.

What if any portion of your income is tax sheltered?

Of course, it really depends on the country you are from. If you are out of the US for 11 of 12 months, your first 72K of income can be tax exempt. Six months doesn't cut it -- especially if it gets reported in a 1099. First rule, keep track of dates -- coming and going on every trip. If the company is not paying your expenses, you can write it off. There is a place. If you have to pay taxes in China, it is deductible. The HR department in Shanghai should have more info on this.
(By Michael)

Can anyone tell me the tax situation for a person with a work permit teaching English in Shanghai?What is the tax rate?

Tax is applicable if your monthly salary exceeds 800 RMB. (In Shanghai it is 1,000 RMB)

Monthly Taxable Income (RMB)	Tax Rate
less than 500	5%
500 to 2,000	10%
2,000 to 5,000	15%
5,000 to 20,000	20%
20,000 to 40,000	25%
40,000 to 60,000	30%
60,000 to 80,000	35%
80,000 to 100,000	40%
more than 100,000	45%

The monthly taxable income above means the balance of the monthly income after deduction of 800 RMB (1,000 RMB in Shanghai) in expenses or the balance after the deduction of additional deductible expenses.


Here is a simple and legal way to calculate your tax:

Monthly Taxable Income less than RMB 500 RMB: (Salary -1000) *5%
Monthly Taxable Income RMB 500 to 2,000 RMB: (Salary -1000)*10% -25
Monthly Taxable Income RMB 2,000 to 5,000 RMB: (Salary -1000)*15% -125
Monthly Taxable Income RMB 5,000 to 20,000 RMB: (Salary -1000)*20% -375
Monthly Taxable Income RMB 20,000 to 40,000 RMB: (Salary -1000)*25% -1,375
Monthly Taxable Income RMB 40,000 to 60,000 RMB: (Salary -1000)*30% -3,375
Monthly Taxable Income RMB 60,000 to 80,000 RMB: (Salary -1000)*35% -6,375
Monthly Taxable Income RMB 80,000 to 100,000 RMB: (Salary -1000)*40% -10,375
Monthly Taxable Income more than 100,000 RMB: (Salary -1000)*45% -15,375

For example, if your monthly salary is 20,000 RMB, the tax you should pay is (20,000-1000)*20% -375 =3,425 RMB. If your monthly salary is 10,000 RMB, the tax you should pay is (10,000-1000)*20% -375 = 1,425 RMB.
Normally, the salary you get is after tax. So you don’t need to worry about it.
(By Redlion)

All correct about taxes but it depends which company you work for. If you work for Informatics for example, the first 4000 RMB is tax free then a flat rate of 20% applies.
If you are part-timing, English teachers tend to work for several companies to take advantage of this 4000 tax-free benefit, so they may work say 20 hours/month for one company then 20 for another, this way they avoid the tax issue.

If you are full time then the first 4000 RMB is still tax-free. After that income is taxable in steps. I checked on this with accounts department. Also, if you are full-time, the company cannot legally tax you for housing/transport allowance. So if your salary is say 12,000 RMB/month and your housing allowance is 2000 RMB this is not taxable. If they tell you otherwise, contact the proper authorities and you will find this is correct
(By Indigo-8)


Note: Thanks to sgali for her research on this topic