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[fox]

a local training center lost a bunch of their foreign teachers as they were skimming a chunk off their wages each months under the guise of tax. 

so i understand we can earn 4800 tax free.

the scale is then

0-500 1%
500-1000 5%
1000-2000 10%
>2000 15%


so if you are fortunate to get paid 10,000
the first 4800 is tax free leaving 5,200 at a tax rate of 15%

so on your 10000 you will have a tax deduction of 780

This is what i was told but it doesn't equate with what they paid me as they deducted a lower rate of tax from my pay. 

can anyone concur or explain how its worked out.

[teacheraus]

As Foreign teachers we can earn up to 4800 tax free.  This year I went from 4500 to 5000 so just over the 4800.  I pay 20 RMB tax so that does fit with the 1% in your figures. I don't know any more than that, other than the tax free threshold being lower for the Chinese. 

[The Local Dialect]

There's a calculator out there somewhere that has been posted in the past. I remember thinking I was paying an indecent amount in taxes but when I plugged it into the calculator it was correct, unfortunately.

I don't suppose it matters that much when you're paying 20RMB on 5000RMB, but the higher your salary gets the tax becomes more and more significant. If you're negotiating for a higher paid job then it is wise to specify that the quoted salary should be after tax.

[MK]

...er, 1% of 200 would be 2 rmb....I am not sure those other taxation figures are right either.

Here's a pretty clear explanation that seems to work for my wage:

http://www.shanghaitechwriter.com/2008/09/22/personal-income-tax-in-china-for-foreigners/

[old34]

Asked and answered previously here.

Go here:
http://raoulschinasaloon.com/index.php?topic=3771.0

Fifth post down.

@ fox - They should have deducted 665 on your 10,000 salary.

[zero]

On 10,000, wouldn't it then be:

-4,800 at 0 percent
-1,000 at 5 percent
-2,000 at 10 percent
-2,200 at 15 percent

[old34]

On 10,000, wouldn't it then be:

-4,800 at 0 percent
-1,000 at 5 percent
-2,000 at 10 percent
-2,200 at 15 percent

No.

Read the post that MK linked to.

Tax rates here are graduated, (or "marginal" in tax hua"). Just like back home.
The frist 500 AFTER 4800 is taxed at 5%.
Then the next 1500 is taxed at 10%.
Then the next 3000 is taxed at 15%
Then the next 15000 is taxed ay 20%
Etc.

That takes you to 19800. If you're making more than that, go hire an accountant.

Or you could just forget trying to understand how taxes work and marginal rates and all that and simply go to the calculator at
http://chinajobline.com/index.php/tax-calculator.html

plug in your salary, indicate you are a foreigner in the drop down box and have your total tax calculated for you in less than 0.01 sec.

[fox]

excellent find old34 that online tax calculator corresponds with my wageslips.   

[Fozzwaldus]

also, British citizens get the first 3 years tax free

[fox]

 

[xwarrior]

also, British citizens get the first 3 years tax free

Maybe - maybe not.

from the British Council

UNDERSTANDING INCOME TAX ON ASSISTANTS’ SALARIES


INFORMATION ABOUT INCOME TAX AND DOUBLE TAXATION AGREEMENTS

(A)  If you are from Austria, China, France, Germany, Italy, Japan or Spain, you may not have to pay income tax on your assistant’s allowance because there is a Double Taxation Agreement, with an article for teachers, between your country and the UK (in the UK you are considered as a teacher for payment purposes). A list of agreements can be found at www.hmrc.gov.uk/manuals/dtmanual/dt2140+.htm. Find your country in the list and then the article relating to teachers.

This agreement lasts only for 2 years (for 3 with China). If you do any teaching work in the UK after this time, you will start paying tax and will also have to pay the tax back for your first 2 years.

from 'UK/CHINA DOUBLE TAXATION AGREEMENT
SIGNED ON 26 JULY 1984
Entered into force 23 December 1984'

Effective in China for individual income tax from 1 January 1985, income tax concerning joint venture with Chinese and foreign investment form 1 January 1986, and income tax concerning foreign enterprises from 01 January 1976

Article 21 Teachers and Researchers
An individual who, immediately before visiting a Contracting State, was a resident of the other Contracting State and who is present in the first-mentioned State for a period not exceeding three years for the purpose of teaching, giving lectures or conducting research at a university, college, school or other recognised educational or scientific research institution in the first-mentioned State shall be exempt from tax in the first-mentioned State for a period not exceeding three years from the date of his first arrival in that State in respect of remuneration from such teaching, lectures or research.

www.britishcouncil.org/languageassistants-fla-understanding-income-tax-0809.doc

I think it would be easier to just pay the tax than worry about this!

[The Local Dialect]

I think it would be easier to just pay the tax than worry about this!

I depends, I suppose. I pay about 1600RMB a month in tax and if there was some regulation that said I should be tax exempt I'd definitely be making sure my school knew about it. Unfortunately for me the USA has not signed this agreement.

That is good info though xwarrior and will probably help some people out! 

[MK]

UK citizen here - I was taxed at my first job in China and then not at my second due to the second school knowing about the double taxation agreement - unfortunately by the time I started earning better money my three years was pretty much up, but the agreement does exist.

Also:

If you do any teaching work in the UK after this time, you will start paying tax and will also have to pay the tax back for your first 2 years [3 withChina].

This advice is for Chinese (and other) language assistants living in the UK, but I was told the same holds true for FTs in China. - you are supposed to pay that tax somewhere, somehow.

[xwarrior]

Thanks Local Dialect and MK. I am from New Zealand so do not qualify for this exemption, but I remembered coming across it in my early days in China.

The main reason I said that it would be easier to pay the tax is the requirement that, should you decide to work in China a day longer than 3 years, the tax for those 3 years of exemption has to be paid.
 
Plans often change. I had planned to stay in China for 1 year but 10 years later I am still here. For most of that time my salary has not been high to attract tax of any significance (if at all) but I would not be happy to be hit with a cumulative tax bill of any size.

While the systems in China make it unlikely that a tax bill is going to arrive, other related systems sometimes have a way of rising up to bite us in the bum.

[fox]

yeah, for sure its a scary thought to cough up all that tax in a oner  .  might need to sell a kidney.