Tax and Income deduction for foreigners working in China

Tax and Income deduction for foreigners working in China

Foreigners that are legally working in China need to pay tax in China. If you are holding a second job or are working illegally and that company deducts tax, you have no grounds to complain about it because you would be turning yourself in for doing something you’re not supposed to do.

While many people have a second job, according to law, one is only allowed one job which is with the company tied with their work permit and residence permit visa. Different officers will consider a second job differently. Locally, some will simply think if one is holding a work visa, it is fine, while others will act according to the way the law is written.

Tax payment by foreignerThe same is true for “Green Card” or Chinese Permanent Residency Card holders. Technically, according to the national laws, if you did not obtain your status due to work (e.g. you obtained it through marriage), you are not allowed to work and working would still require a work permit; however, locally some officers will consider it okay to work, while others will not.

Below please find the tax brackets for China. The first 4,800 RMB of income earned per month is tax free for foreigners.

How to Calculate Salary Income Tax in China:

Taxable income = Gross Income – 4,800 RMB

Tax payment by foreigner, tax rate for foreigners, how much tax to be paid by a foreigners, china tax, foreigners tax, How much tax to pay in china?Besides tax, social insurance is the other deduction that employers are required to deduct from your salary. The amount varies according to the specific location, so we are listing here two deductions for reference: Shanghai and Beijing.

Tax payment by foreigner, tax rate for foreigners, how much tax to be paid by a foreigners, china tax, foreigners tax, How much tax to pay in china?

If you are outside of these two places, you can find out the social security deductions by

asking your employer as they are submitting the payments to the government. It is possible for you to check the local deductions and social security paid by taking  your passport to the local (district level) social security office. The same is true to verify tax information or taxes paid with the local (district level) tax office.

Please note that the social security contributions have been made mandatory in Beijing since October 2011 and were rolled out nationally at this time, while other cities and provinces were given freedom on how and when to implement the policy. At the moment it is not mandatory in Shanghai.

Contact us at support@kudosbay.com  or scan the code  if you need any help with Financial Accounting, Company Registration, Startup in China or Work Visa.

 

Kudosbay, visa, work permit , work visa in china, company registration, startup in china, startup in Shanghai, company registration in ShanghaiAbout the Authors:

Ikbal (known by the nickname “Ikky”) is an R&D Manager working in Shanghai. He has been living in China for over 11 years.

Julian runs a company that works with individuals and organizations doing business between the US, China, and Africa. He has been based in China for a number of years.

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