Expat income tax 2011

Ask about visas and legal issues

Expat income tax 2011

Postby alfie » Tue Aug 02, 2011 9:55 pm

Hi I am relocating to Shanghai in October 2011 and is wondering how much taxes i have to pay each month. I read somewhere that there will be a new taxation after 1st September 2011. Really appreciated it if anyone could give me some advice.

My monthly salary is 20,000 rmb
My monthly housing allowance is 6,000 rmb

I also read that insurance, medical and food allowances are tax deductible?

Anyone heard about the new Chinese Social Security payments?

Thank you very much.
alfie
Newbie
 
Posts: 1
Joined: Tue Aug 02, 2011 9:49 pm

Re: Expat income tax 2011

Postby TaxBeagle » Wed Aug 03, 2011 12:12 pm

Hi alfie, i"m stuck for time today but I will say that the answers to all your questions can be found in other posts. Do a search for 'social security' or 'social insurance' and 'taxation'.
User avatar
TaxBeagle
Reacher
Reacher
 
Posts: 272
Joined: Mon Jun 20, 2011 5:09 pm

Re: Expat income tax 2011

Postby jzzzzzzz » Wed Aug 03, 2011 12:28 pm

This thread for example http://www.shanghaiexpat.com/phpbbforum/chinese-social-security-payments-t128053.html

The Chinese Social Security has not come into force for foreigners in Shanghai as of yet.
User avatar
jzzzzzzz

Board Royalty
Board Royalty
 
Posts: 6896
Joined: Fri Jul 07, 2006 2:34 pm

Re: Expat income tax 2011

Postby MoonOverMiami » Wed Aug 03, 2011 1:06 pm

I've read that expat's income tax deductible of RMB4,800 will not change.
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2011

Postby chingiskhan » Wed Aug 03, 2011 1:48 pm

alfie wrote:Hi I am relocating to Shanghai in October 2011 and is wondering how much taxes i have to pay each month. I read somewhere that there will be a new taxation after 1st September 2011. Really appreciated it if anyone could give me some advice.

My monthly salary is 20,000 rmb
My monthly housing allowance is 6,000 rmb

I also read that insurance, medical and food allowances are tax deductible?

Anyone heard about the new Chinese Social Security payments?

Thank you very much.


Income tax is very easy to calculate using the formula you can find easily online. Medical insurance IS taxable, it's not a tax free benefit, but accommodation and food can be provided free of income tax so your 6000 RMB will be paid in full.

My health insurance costs about 18,000 RMB a year (yeah it's a crappy cheap one) so I have to pay tax on that (say 25%).
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Re: Expat income tax 2011

Postby Michael » Wed Aug 03, 2011 1:54 pm

The other question is how much will you pay in your country taxes in addition to Chinese taxes. Every country has their own rules about that. Some companies offer tax equalization benefit to help balance that issue.
If you need a decent v-p-en, pm me for one that works well.
User avatar
Michael

Busy Busy-

Moderator
Moderator
 
Posts: 4396
Mood: Happy
Joined: Fri Mar 22, 2002 9:34 am

Re: Expat income tax 2011

Postby chingiskhan » Wed Aug 03, 2011 1:54 pm

alfie wrote:My monthly salary is 20,000 rmb
My monthly housing allowance is 6,000 rmb


Unless my details are out of date, you will pay 2665 RMB in tax, so net income is 17,335.
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Re: Expat income tax 2011

Postby MoonOverMiami » Wed Aug 03, 2011 2:38 pm

chingiskhan wrote:
alfie wrote:My monthly salary is 20,000 rmb
My monthly housing allowance is 6,000 rmb


Unless my details are out of date, you will pay 2665 RMB in tax, so net income is 17,335.


And starting Sept 1, your take home salary will be RMB16,575 under the new tax brackets.
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2011

Postby chingiskhan » Wed Aug 03, 2011 3:02 pm

MoonOverMiami wrote:
chingiskhan wrote:
alfie wrote:My monthly salary is 20,000 rmb
My monthly housing allowance is 6,000 rmb


Unless my details are out of date, you will pay 2665 RMB in tax, so net income is 17,335.


And starting Sept 1, your take home salary will be RMB16,575 under the new tax brackets.


Bugger! Do you have a link to the new brackets? I'd like to know how much worse off I'm going to be after September.
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Re: Expat income tax 2011

Postby MoonOverMiami » Thu Aug 04, 2011 1:45 pm

Here is what I got from my accounting dept:

Salary after deductible - tax percentage - tax deduction

0-1500 3% 0
1501-4500 10% 105.00
4501-9000 20% 555.00
9001-35000 25% 1,005.00
35001-55000 30% 2,755.00
55001-80000 35% 5,505.00
80001+ 45% 13,505.00

Monthly salary = 20,000
expat deductible = 4,800

Taxable Salary = 15,200 => 25% tax bracket
Income Tax = 3,800.00
Income Tax Credit = 1,005.00
Total Income Tax = 2,795.00

Net Income = 20,000-2,795 = RMB17,205

Oops...I calculated it wrong before. Used the old income tax credit table...sorry!
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2011

Postby chingiskhan » Thu Aug 04, 2011 2:23 pm

Oh crap that puts me around 800 RMB worse off each month. Not a disaster but not the best news I've had today.
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Re: Expat income tax 2011

Postby kirit » Fri Aug 12, 2011 10:45 am

Dear Veejay...

Following is a very good explanation on expat income tax given by you...I just want to have guidance wheter this 25% income tax includes social security charges like 2% medical , 1% unemployment , 8 % pension etc. or it additional every month ? Do these charges applicable to expat also ?

=============================================================

by MoonOverMiami » Thu Aug 04, 2011 1:45 pm

Here is what I got from my accounting dept:

Salary after deductible - tax percentage - tax deduction

0-1500 3% 0
1501-4500 10% 105.00
4501-9000 20% 555.00
9001-35000 25% 1,005.00
35001-55000 30% 2,755.00
55001-80000 35% 5,505.00
80001+ 45% 13,505.00

Monthly salary = 20,000
expat deductible = 4,800

Taxable Salary = 15,200 => 25% tax bracket
Income Tax = 3,800.00
Income Tax Credit = 1,005.00
Total Income Tax = 2,795.00

Net Income = 20,000-2,795 = RMB17,205
============================================================================
kirit
Newbie
 
Posts: 2
Joined: Fri Aug 12, 2011 10:36 am

Re: Expat income tax 2011

Postby scotch » Fri Aug 12, 2011 11:07 am

The Chinese Social Security has not come into force for foreigners in Shanghai as of yet


Yes it did. Employers cannot pay yet, but they must accrue it since 1st of July.

In the IIT calculation above, you also need to deduct the Social security paid by the employee (roughly around 1,200 per month).

Kirit, this is IIT. Social security is different concept
scotch
Rocker
Rocker
 
Posts: 795
Joined: Tue Dec 15, 2009 2:43 pm

Re: Expat income tax 2011

Postby kirit » Sat Aug 13, 2011 12:22 pm

Thanks scotch, what is IIT calculation? Actually I m negotiating salary for relocating to Shanghai and hence need some information , like over & above income tax of 25% & IIT/social security, what are other components deductible from monthly salary ?

Does pension 8% is applicable for foreigner? Is it refundable? In India pension fund is generally charged on half of the gross monthly salary and its refundable from Government, but no idea for rules in China for Expats, .Please guide me ….
kirit
Newbie
 
Posts: 2
Joined: Fri Aug 12, 2011 10:36 am

Re: Expat income tax 2011

Postby MoonOverMiami » Wed Aug 17, 2011 11:06 am

The 25% is only for individual income tax.

The social security portion would be the following (employer - employee contribution):
Retirement fund: 22% - 8%
Medical Insurance: 12% - 2%
Unemployment: 2% - 1%
Maternity: .5% - 0%
Work Related Injury: 0.5% - 0%

Supposedly, when a foreigner leaves they can apply to get their entire contribution returned. Someone here mentioned its only the employee contribution, but what it sounded like its the entire employer/employee contribution (though I am still unsure if that is the case).
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2011

Postby Ouchh » Wed Aug 17, 2011 1:12 pm

Hi all,

I have a question regarding the payment of the IIT.
Is there anyway to pay the IIT by myself ? (not with the company.)
Anyone of you have the same case ?
Do I need to register to the tax department (employee who is getting salary abroad)
Any address where I can get information about that ?

Please advice if any information,

Thanks
Ouchh
Newbie
 
Posts: 8
Joined: Mon Apr 04, 2011 11:52 am

Re: Expat income tax 2011

Postby jay_dee » Thu Aug 18, 2011 10:51 am

Something to consider is any bonus that might be paid to the employee.
A commission/bonus (even if deferred say 3 months) would be included in the current months salary as normal income and the tax would then be calculated. So if you earned a 10% commission due from January sales it would be added into your May salary (3 month deferral).
Now, according to the Chinese tax law, the social security <employee> portion (8+2+1=11%) is off the gross THEN the expat allowance (4800) is deducted to figure the tax at the rate noted and then the credit is applied.
Therefore for the OP (if the social security is withheld) the calculation would be:
20,000 - 2,200 (11%) = 17,800
17,800 - 4,800 = 13,000
Tax rate: 25% of 13,000 = 3,250
Tax credit: 3,250 - 1005 = 2,245
So net monthly salary is 17,800 - 2,245 = 15,555
Yes this is kind of odd as the PRC screws itself on personal income tax collected by figuring taxes after the social security portion is deducted.
An expat CAN apply to have the 11% social security portion refunded to them and the company would have to do the same for their portion, lots of luck with getting anything without a fight as TIC.
So IF you get a lump-sum bonus you have a one-shot deal for that, best if used for a year-end salary bonus. The accounting dept SHOULD either cut a individual check or note the bonus as a separate line item (if included in your Dec/Jan salary statement) so you can split it per the tax law.
Using the OP salary:
A year-end bonus of one-months salary (20,000) is divided by 12 months [20,000/12 = 1,667]
Add that to the monthly salary paid (after social security) [17,800 + 1,667 = 19,467]
Recalculate the tax base [19,467 - 4,800 = 14,667]
Verify the tax rate per the schedule (to see if its higher, if so use that new rate)
Calculate the income tax on the bonus:
Tax rate: 25% of 20,000 = 5,000
So the net bonus is: 20,000 - 5,000 = 15,000
NOTE:
Insist your company provide a chopped year-end salary statement of deductions/payments so you can file your personal income tax form to the PRC and not be penalized.


Edit:
1. Always verify the numbers provided by your employer to ensure they match what you have actually received.
2. The tax bureau will send you a formal statement as to what tax payments they have received in your name. It is YOUR RESPONSIBILTY to verify the numbers are correct. In some cases, deductions clamed as tax payments NEVER get submitted to the proper agency (only to line peoples pockets - TIC).
3. Depending on your employment, bonuses (cash/plane tickets, etc.) are provided at the end of a employment contract (6-12 months). Many teaching positions end in June so be wary of what is being withheld if you will leave the PRC.
Last edited by jay_dee on Thu Aug 18, 2011 1:13 pm, edited 1 time in total.
jay_dee
Wonder Wit
Wonder Wit
 
Posts: 3855
Mood: Angry
Joined: Sun Mar 22, 2009 3:56 am

Re: Expat income tax 2011

Postby MoonOverMiami » Thu Aug 18, 2011 11:20 am

Weren't they going to revise the tax schedule for the bonus? Was reading an article where they were saying that someone getting a one month bonus of RMB25k's net take was less than an RMB24k's net by a few hundred RMB.
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2011

Postby jay_dee » Thu Aug 18, 2011 12:54 pm

Don't know of any 'formal' revisions to the stated/written policy, perhaps things may change in the future.
jay_dee
Wonder Wit
Wonder Wit
 
Posts: 3855
Mood: Angry
Joined: Sun Mar 22, 2009 3:56 am

Re: Expat income tax 2011

Postby hughesyd » Thu Aug 18, 2011 9:15 pm

scotch wrote:
The Chinese Social Security has not come into force for foreigners in Shanghai as of yet


Yes it did. Employers cannot pay yet, but they must accrue it since 1st of July.

In the IIT calculation above, you also need to deduct the Social security paid by the employee (roughly around 1,200 per month).

Kirit, this is IIT. Social security is different concept


Are you sure about your info on Social fund contributions for expats?. I had FESCO Adecco in the office today, and their advice was that it wasnt going to be compulsary for expats?
hughesyd
Seeker
Seeker
 
Posts: 44
Joined: Tue Dec 07, 2010 5:52 am

Re: Expat income tax 2011

Postby Medea » Thu Aug 18, 2011 9:46 pm

jay_dee wrote:2. The tax bureau will send you a formal statement as to what tax payments they have received in your name. It is YOUR RESPONSIBILTY to verify the numbers are correct. In some cases, deductions clamed as tax payments NEVER get submitted to the proper agency (only to line peoples pockets - TIC).


:? interesting ....
and how do I get this formal statement if I pay the taxes myself every month?

It's a long story but we are paid abroad and go to the Chinese tax bureau every month, hand in the income tax sheet (filled in by us), it get's chopped, we get a kind of bank transfer form, go to the next bank and pay cash ....? Never, in all these years we got this formal statement you are talking about ? :shock: :cry:
I support Jaiya's Animal Rescue (JAR) Next JAR Animal Adoption Day is on Sunday, June 1
User avatar
Medea
Fire-eater
Fire-eater
 
Posts: 2891
Joined: Mon May 05, 2008 4:57 am

Re: Expat income tax 2011

Postby jay_dee » Fri Aug 19, 2011 8:56 am

Sent you a PM
jay_dee
Wonder Wit
Wonder Wit
 
Posts: 3855
Mood: Angry
Joined: Sun Mar 22, 2009 3:56 am

Re: Expat income tax 2011

Postby scotch » Fri Aug 19, 2011 10:59 am

hughesyd wrote:
scotch wrote:
The Chinese Social Security has not come into force for foreigners in Shanghai as of yet


Yes it did. Employers cannot pay yet, but they must accrue it since 1st of July.

In the IIT calculation above, you also need to deduct the Social security paid by the employee (roughly around 1,200 per month).

Kirit, this is IIT. Social security is different concept


Are you sure about your info on Social fund contributions for expats?. I had FESCO Adecco in the office today, and their advice was that it wasnt going to be compulsary for expats?


I am totally sure. Compulsory from 1st of July. The problem is that you cannot make the payment yet, as the system is not ready, so you will need to accrue it every month.
scotch
Rocker
Rocker
 
Posts: 795
Joined: Tue Dec 15, 2009 2:43 pm

Re: Expat income tax 2012

Postby historymaker910 » Mon Feb 13, 2012 3:35 pm

does anyone know if we expats from the US have to pay the 9% (roughly) housing contribution?

employer is already paying the 37% and now we're trying to figure out if 9% is required.

thanks in advance.
historymaker910
Lurker
Lurker
 
Posts: 31
Joined: Tue Nov 22, 2011 7:23 am

Re: Expat income tax 2012

Postby digicheong » Mon Feb 13, 2012 4:07 pm

historymaker910 wrote:does anyone know if we expats from the US have to pay the 9% (roughly) housing contribution?

employer is already paying the 37% and now we're trying to figure out if 9% is required.

thanks in advance.


It's 10%, 8% is for pension and 2% for insurance.
digicheong
Seeker
Seeker
 
Posts: 68
Joined: Sat May 22, 2010 3:04 pm

Re: Expat income tax 2012

Postby chineseexpatpudong » Mon Feb 13, 2012 4:25 pm

digicheong wrote:
historymaker910 wrote:does anyone know if we expats from the US have to pay the 9% (roughly) housing contribution?

employer is already paying the 37% and now we're trying to figure out if 9% is required.

thanks in advance.


It's 10%, 8% is for pension and 2% for insurance.


But I think the 10% is to a maximum of 3 times the city average salary, which is something like 4-5,000 in Shanghai.
So max you could have to pay would be 10% of 15,000, about 1,500.
And the 8% you can claim back when you leave China.
chineseexpatpudong
Rocker
Rocker
 
Posts: 655
Joined: Mon May 17, 2010 2:45 pm

Re: Expat income tax 2012

Postby MoonOverMiami » Tue Feb 14, 2012 9:38 am

historymaker910 wrote:does anyone know if we expats from the US have to pay the 9% (roughly) housing contribution?

employer is already paying the 37% and now we're trying to figure out if 9% is required.

thanks in advance.


As far as I know, expats are exempt from the 7% contribution for housing. Its 7% from employer, and 7% from employee.
Charly: "Were you always this stupid or did you take lessons?"
Mitch: "I took lessons."
User avatar
MoonOverMiami
Fire-eater
Fire-eater
 
Posts: 2565
Joined: Mon Jan 07, 2008 9:58 am

Re: Expat income tax 2012

Postby chingiskhan » Tue Feb 14, 2012 9:40 am

chineseexpatpudong wrote:
digicheong wrote:
historymaker910 wrote:does anyone know if we expats from the US have to pay the 9% (roughly) housing contribution?

employer is already paying the 37% and now we're trying to figure out if 9% is required.

thanks in advance.


It's 10%, 8% is for pension and 2% for insurance.


But I think the 10% is to a maximum of 3 times the city average salary, which is something like 4-5,000 in Shanghai.
So max you could have to pay would be 10% of 15,000, about 1,500.
And the 8% you can claim back when you leave China.


Yes, it is capped so most expats will only suffer a minor inconvenience and certainly you won't be paying an extra 8% or 10% of your hard earned cash to the government. It will vary by city though.
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Re: Expat income tax 2011

Postby historymaker910 » Tue Feb 14, 2012 10:49 am

thx for the quick responses. can u guys provide some reference links for the %'s?
i thought it was 37% and capped at 11,688rmb per month.

http://expathealth.org/country-alerts/c ... ct-expats/
historymaker910
Lurker
Lurker
 
Posts: 31
Joined: Tue Nov 22, 2011 7:23 am

Re: Expat income tax 2011

Postby chingiskhan » Tue Feb 14, 2012 11:00 am

historymaker910 wrote:thx for the quick responses. can u guys provide some reference links for the %'s?
i thought it was 37% and capped at 11,688rmb per month.

http://expathealth.org/country-alerts/c ... ct-expats/


Did you not read your own article? It quite clearly states that 37% is the employer's contribution while individuals pay between 8-11%.

In some employers must make a contribution equal to 31% of their employees’ salaries. In others it’s 37%.

Your part will be between 8-11% so 9% sounds about right, BUT it is capped at 3 times the average salary for your city which is about 12,000 RMB. So 8% of 12,000 RMB is around 1,000 RMB.
chingiskhan
Shanghai Royalty
Shanghai Royalty
 
Posts: 9498
Joined: Tue Apr 24, 2007 3:53 pm

Next

Return to Legal Issues

 


  • Related topics
    Replies
    Views
    Last post

Who is online

Users browsing this forum: No registered users and 0 guests