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Individual Income Tax

March 26,2018.

Individual Income Tax in China

Usually, salaries obtained by an employee during the working period in China are deemed to be Taxable Income by China Local Tax bureau, no matter paid by domestic or foreign enterprises or individual employers, are classified as income derived from China. This taxable income also includes incentive compensations such as commissions and bonuses, cash allowances etc.

The Basis of China Individual Income Tax Calculation:

China Individual Income Tax Calculation

1. Taxable Income = Wages and Salaries – Basic Deduction – Other Allowable Deductions

2. Tax Amount Payable = Taxable Income × Applicable Tax Rate – Quick Calcul

The Standard Deductions for China Individual Income Tax:

1. The standard deduction for Chinese residents is RMB 3,500/month

2. The standard deduction for applicable to expatriates is RMB 4,800/month

The Standard Deductions for China Individual Income Tax

The Scope of the Charge for China Individual Income Tax (extract from China individual Law article II)

The Scope of the Charge for China Individual Income Tax1. Income from wages and salaries;

2. Income of individual industrial and commercial operators from production or business operation;

3. Income from business operations contracted or leased from enterprises or other undertakings;

4. Income from labor service;

5. Income from remunerations to authors;

6. Income from royalties;

7. Income from interests, dividends and bonuses;

8. Income from the leasing of property;

9. Income from transfer of property;

10. Accidental income;

11. Other types of income specified as taxable by the financial departments under

the State Council.

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