Chinese tax for Expats?

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gundog1963

Squeeker

Joined: Feb 18, 2004
Posts: 16

Status: Offline

Posted: Jan 19, 2006 - 01:42 AM
Post subject: Chinese tax for Expats?

I have asked so many people this question I am literally sick of it. But my company keeps asking anyways.

From my understanding if I were to exceed 180 day in China per year my US based salary would be subject to local Chinese tax for the time I spend there.

Is this true? Is there any way around this issue? Can we pay a salary through the China company and satisfy the tax issue with out subjecting our US based income to China tax?

Any response is greatly appreciated.

Andreas
Board Royalty

Joined: Feb 27, 2004
Posts: 6207
Location: 31 N 121 E

Posted: Jan 19, 2006 - 02:02 AM

If you are not a resident, you can forget the 180 days thingy. Nobody here is able to check it. They have difficulty synchronizing a traffic light here. With Hong Kong citizens it's a different story. There they are quite strict.

If you are a resident it's a different story. Best is to have your company split your salary. One part in your country of origin, the other in China. In China your first RMB 4000 are tax free. Bear in mind that allowances are regarded as taxable income. So you have to balance things a bit. Don't try to be too gready by keeping your Chinese salary too low. They are slow here, but not that slow.

Another thing that is important if you are going to stay here for a longer time is the 5 year rule. If you have not been out of the country for 30 days in a row in one year during the past 5 years, or 90 days scattered over a year during the past 5 years, you can be taxed over your worldwide income in China (in theory at least).

Again, how they want to check that in a country where they can't even enforce the most simple traffic laws is not entirely clear to me. But then better safe than sorry.
And what's better than to be able to say to the boss, that the law requires you to take a month holiday out of the country. Bummer...

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