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Sand_Dancer
Newbie
Joined: Oct 20, 2006
Posts: 9
Status: Offline
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 Posted:
Feb 27, 2007 - 10:15 PM |
 
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| Post subject: Chinese Tax on UK paid salary |
Could anyone please clarify the UK - China Tax arrangemnts.
My salary will be paid from the UK into a UK bank account which is taxed at source.
I will also be paid "an allowance" into any bank I nominate.
In my naivety I intended to get this allowance paid into a Chinese bank and pay local taxes on it
and then claim my UK tax back being a non-resident.
I appreciate this would be to good to be true - I would also appreciate any advice and/or comments. |
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Angie
LoopKicker
Joined: Feb 01, 2004
Posts: 848
Status: Offline
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Feb 28, 2007 - 10:30 AM |
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First of all, the best would be to get in touch with a professional tax consultant; not sure if you get any good & legal answer from the forum.
My idea (I'm not a tax consultant): you should be taxed in the country where you live & work. So, if you stay more than 183 days in China you should be taxed in China. Most countries have a double-taxing agreement (or something like that) with China which prevents that you are taxed twice. So you should inform Income REvenue that you live abroad so that they won't tax your salary (paid in the UK). Not sure if you can do it later and claim back the taxes already paid in 2006 - you might have to prove that you paid your taxes in China - and this could be dangerous : please see below.
In China you would have to declare your full salary. Now, it's actually up to you how much of the money you declare. There's no way the Chinese tax bureau knows about your UK salary (unless you tell them, or UK Income Revenue tells their Chinese colleagues), but you have to file a tax declaration (by end of March this year - for your salary in 2006) where you have to state all your worldwide income. If you are living in China for less than 5 years then you are not required to pay tax for any income that does not result from your job in China (e.g. renting out your house in the UK; your UK-salary part would not fall into this category).
If you play it legally you would declare your UK salary part and declare how much taxes you paid. The Chinese would then calculate if Chinese taxes are higher. If yes, you would have to pay the difference (in China); if not they wouldn't reimburse you for the difference. Anyway, for the next year they would know that you get part of your salary in your UK bank account.
If yo dont' play it legally (which I do not recommend, don't get me wrong!) then you forget about the taxes paid in the UK in 2006 and you forget declaring your salary paid in the UK and for this year you only pay taxes on your Chinese part of your salary. |
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horsemandk
StreetBeater
Joined: Mar 23, 2006
Posts: 2241
Location: Shanghai
Status: Offline
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Feb 28, 2007 - 11:23 AM |
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There is a lawyer in this forum, he can probably help you with this question. The Chinese government has no legal claim to information about your salary paid overseas, so it's actually up to you what you want to do. More and more companies have this arrangement because it's more simple for the employee, they do change it a little by paying some of the salary and taxes here in China. |
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Those parts of the system that you can hit with a hammer (not advised) are called hardware; those program instructions that you can only curse at are called software. |
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