"Without money you are nothing..."

[GZBILL]

this thread is confusing

 

income tax is on a sliding scale in China, Jin says most (workers) dont pay anything.

 

They pay a small amount for pention, thats about it.

 

 

property tax she says has never heard of it, no-one in her family has ever paid it.

 

 

she says there is no tax on stuff you buy from shops.

 

 

All I can say is you guys must be living, visiting, working for and buying houses/goods in the wrong places or through the wrong poeple.

No sure, but I do believe there's a different set of tax rules for expats working and living in China, Rob.

 

Also it is a possibility that the taxes are embedded so that the people do not realize it.

 

Yes, individual income tax is on a sliding scale basis according to how much you earn. For Chinese people, the threshold under which no ITT is levied is approximately 1,200 RMB per month. For expats it is approximately 4,800 RMB per month. Regardless of your salary amount, all Chinese people pay into the social insurance schemes. Expats, unless you have permanent residence, are not allowed to pay into the social insurance schemes.

 

There is property tax unless you are dealing with farmland used to cultivate crops. There is no way to get around it. Whether you realize you are paying it or not is another issue.

 

As for sales tax, it is, indeed, embedded into the price of goods. So is the assessment for fapiaos as well as, obviously, business income tax and, in some cases, a turnover tax based on a percentage of a company's entire turnover for the year. Most people never realize they are paying these taxes as it is not like in the US where in most places prices are quoted as $1.99 + tax. The fact that most people are ignorant as to how the sales tax system works in China does not mean it doesn't exist.

 

Additionally, China is in the process of introducing a VAT system similar to the type used in Europe / UK. They are also in the process of introducing an annual property tax levy like that which is used in most places in the US. Both of these measures are highly unpopular and to make them more palatable, if at all possible, they will be introduced gradually.

 

On a related note, tax evasion is China is pervasive and of epidemic porportions amongst the Chinese population and the underground expat population. For those of us who work here legally, it is interesting to note that over 50% of Shanghai's individual income tax revenue comes from expat labor. Another way to look at it would be 50% of individual income tax revenue is paid by a < 1% segment of the population.

 

This tax evasion issue is finally getting the attention of high-level political leaders and now they are tying work permits / visas / residence permits into a database which already includes data from commercial banks and is soon to be tied into the tax bureau's own system.

 

Bill, I was expecting my income tax to be in the 25% range or higher. It's actually been around 13%.

 

It depends on how much you earn.

 

It goes from 5% to 45% in five-percent increments. To pay 15% or less, you're earning less than 10,000 RMB. Not particularly attractive, but then it depends on your lifestyle and financial committments.

 

Mine is 45%.

 

So the Chinese get 45% of your earned income each year?

 

Not exactly that much. Like Randy pointed out, it is progressive but the calculations are complex. I should have found the other chart that breaks it down into what they call "quick deductions."

 

While each month it's not quite 45% (also because I can deduct certain non-taxable expenses as I mentioned in an earlier post), the one month per year where bonuses are paid almost does take a flat 45%.

[GZBILL]

Bill what about expat retirees whose entire income is from pensions and investments outside of China???

 

China has learned a lot from the US. They tax on worldwide income.

 

You can avoid that by leaving the country for 30 days per year or something like that. There is a stay requirement which, if passed, dictates how you are taxed.

 

I'll have to ask accounting tomorrow the exact requirement as well as the exact formula used to calculate taxes.

[rogerluli]

Bill what about expat retirees whose entire income is from pensions and investments outside of China???

 

China has learned a lot from the US. They tax on worldwide income.

 

You can avoid that by leaving the country for 30 days per year or something like that. There is a stay requirement which, if passed, dictates how you are taxed.

 

I'll have to ask accounting tomorrow the exact requirement as well as the exact formula used to calculate taxes.

 

Leaving for a few months every year is in our plans anyway...

[tsap seui]

Bill what about expat retirees whose entire income is from pensions and investments outside of China???

 

China has learned a lot from the US. They tax on worldwide income.

 

You can avoid that by leaving the country for 30 days per year or something like that. There is a stay requirement which, if passed, dictates how you are taxed.

 

I'll have to ask accounting tomorrow the exact requirement as well as the exact formula used to calculate taxes.

 

Leaving for a few months every year is in our plans anyway...

 

My income in China will be from Uncle Sam. It will be interesting to see if that is taxed in China.

 

I also am interested in seeing how often and for what length of time I'll need to leave China, since permanent resident rules have changed and I don't intend to work in China, unless I have to to fill out some requirement or other for the Chinese or DOS.

 

For us, my going to live in China for about 3 years before applying for a DCF IR-1 type visa, is looked at as an exciting and solid start to our married life together, and it will be quite an adventure as we travel China and "down under". I will have the freedom of "time"....time to do as I bloody well please, for the first time in my life...and I will be living with a beautiful lil' rabbit...with our hands on each other....I mean...time on my hands.

 

tsap seui

[rogerluli]

Bill what about expat retirees whose entire income is from pensions and investments outside of China???

 

China has learned a lot from the US. They tax on worldwide income.

 

You can avoid that by leaving the country for 30 days per year or something like that. There is a stay requirement which, if passed, dictates how you are taxed.

 

I'll have to ask accounting tomorrow the exact requirement as well as the exact formula used to calculate taxes.

 

Leaving for a few months every year is in our plans anyway...

 

My income in China will be from Uncle Sam. It will be interesting to see if that is taxed in China.

 

 

tsap seui

 

I don't quite understand how they can do it either... My SS and state pension will be direct deposited in a US bank and I'll be withdrawing in China what we need for living expenses...But if you can get around the whole taxation issue by merely being out of the country for 30 days a year then that's the way to go...

[tsap seui]

Bill what about expat retirees whose entire income is from pensions and investments outside of China???

 

China has learned a lot from the US. They tax on worldwide income.

 

You can avoid that by leaving the country for 30 days per year or something like that. There is a stay requirement which, if passed, dictates how you are taxed.

 

I'll have to ask accounting tomorrow the exact requirement as well as the exact formula used to calculate taxes.

 

Leaving for a few months every year is in our plans anyway...

 

My income in China will be from Uncle Sam. It will be interesting to see if that is taxed in China.

 

 

tsap seui

 

I don't quite understand how they can do it either... My SS and state pension will be direct deposited in a US bank and I'll be withdrawing in China what we need for living expenses...But if you can get around the whole taxation issue by merely being out of the country for 30 days a year then that's the way to go...

 

 

That sounds like the scenerio I'll use, if need be, Roger.

 

When Bubba, Jr.'s school lets out for the summer we could just do a one month "tiki tour" of New Zealand, so's my butt would be out of China. Take a chopper flight up to the snow pack down on the south island's Southern Alps" and tip my ol' floppy Aussie hat towards Guangzhou as I say "thank you" to the DOS for the denial and it's nudge to stop working in america and let them pay me to play in China with my bona fide relationship.

[Guest ShaQuaNew]

 

It depends on how much you earn.

 

It goes from 5% to 45% in five-percent increments. To pay 15% or less, you're earning less than 10,000 RMB. Not particularly attractive, but then it depends on your lifestyle and financial committments.

 

Mine is 45%.

 

So the Chinese get 45% of your earned income each year?

 

 

No -

That part of income in excess of 100,000 yuan 45

 

Just like in the US, if you're in the 45% tax bracket, it means each additional dollar is taxed at 45%.

 

Say, you earned 100,000RMB and paid 15,000RMB in taxes. Your tax bracket (or tax rate) would be 45%, but you would only pay 15% of your total income in taxes. This is a prgressive rate structure, similar to what we have in the US.

 

 

Jesse's 15% is probably an overall 15% of his income, and NOT his tax bracket.

 

Honestly guys, I've checked with several of my ex-pat associates, and like me, all of them are being paid substantially more than 40K RMB per month. Not a single one of them has ever paid more than 15% tax.

[IllinoisDave]

 

It depends on how much you earn.

 

It goes from 5% to 45% in five-percent increments. To pay 15% or less, you're earning less than 10,000 RMB. Not particularly attractive, but then it depends on your lifestyle and financial committments.

 

Mine is 45%.

 

So the Chinese get 45% of your earned income each year?

 

 

No -

That part of income in excess of 100,000 yuan 45

 

Just like in the US, if you're in the 45% tax bracket, it means each additional dollar is taxed at 45%.

 

Say, you earned 100,000RMB and paid 15,000RMB in taxes. Your tax bracket (or tax rate) would be 45%, but you would only pay 15% of your total income in taxes. This is a prgressive rate structure, similar to what we have in the US.

 

 

Jesse's 15% is probably an overall 15% of his income, and NOT his tax bracket.

 

Honestly guys, I've checked with several of my ex-pat associates, and like me, all of them are being paid substantially more than 40K RMB per month. Not a single one of them has ever paid more than 15% tax.

Shhhhhhh...

[Randy W]

Honestly guys, I've checked with several of my ex-pat associates, and like me, all of them are being paid substantially more than 40K RMB per month. Not a single one of them has ever paid more than 15% tax.

 

Bill's rate tables

 

This is the table for annual income

 

1 Income of 5,000 yuan or less 5 %

2 That part of income in excess of 5,000 to 10,000 yuan 10 %

3 That part of income in excess of 10,000 to 30, 000 yuan 15 %

4 That part of income in excess of 30,000 to 50, 000 yuan 20 %

5 That part of income over 50,000 yuan 25 %

 

Not sure that we need to debate arithmetic here guys.