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Who pays individual income tax

If you have a domicile in China or have no domicile but have resided in China for a cumulative period of 183 days within a tax year, you will be identified as a Chinese tax resident and need to pay individual income tax on income earned from within and outside the territory of China.

If you have not resided in China for a cumulative period of 183 days within a tax year, you will be identified as a non-resident individual who needs to pay individual income tax on income earned from within the territory of China.

 

How to file taxes

Foreigners residing in China who collect employment wages, labor remuneration, royalties, and franchise fees within the tax year must file the Annual Self-declaration Form for Individual Income Tax with the tax authorities between March 1 and June 30 of the following year and settle the comprehensive income tax.

Foreigners who are non-resident individuals are not required to settle comprehensive income tax. 

China has signed agreements to avoid double taxation with 114 countries and regions. Expats eligible for tax reductions or exemptions as stipulated in the agreements can determine whether they meet the conditions to enjoy the benefits of these treaties. 

 

How much to pay

The Individual Income Tax system in China is based on a progressive tax rate system, meaning that the tax rate increases as the taxable income increases. 

 

Calculating Taxable Income

Personal Income Tax Rates (Yearly Income)

(Applicable to Chinese tax residents)

Bracket	Annual Taxable Income (CNY)	Tax Rate	Quick Tax Deduction (CNY)
1	Less than 36,000	3%	0
2	Between 36,000 and 144,000	10%	2,520
3	Between 144,000 and 300,000	20%	16,920
4	Between 300,000 and 420,000	25%	31,920
5	Between 420,000 and 660,000	30%	52,920
6	Between 660,000 and 960,000	35%	85,920
7	Over 960,000	45%	181,920

 

Personal Income Tax Rates (Monthly Income)

(Applicable to non-resident individuals.)

Bracket	Monthly Taxable Income (CNY)	Tax Rate	Quick Tax Deduction (CNY)
1	Less than 3,000	3%	0
2	Between 3,000 and 12,000	10%	210
3	Between 12,000 and 25,000	20%	1,410
4	Between 25,000 and 35,000	25%	2,660
5	Between 35,000 and 55,000	30%	4,410
6	Between 55,000 and 80,000	35%	7,160
7	Over 80,000	45%	15,160

 

Taxable income = (Total income) – (Initial deduction) – (Special additional deduction/Tax-deductible allowance (especially for foreigners)

Tax payable = (Taxable income * Tax rate) – (quick deduction)

 

Tax benefits 

From Jan 1, 2019 to Dec 31, 2027, expats who are Chinese tax residents may choose to enjoy special additional deductions of individual income tax or the tax-free treatment of housing subsidies, language training and children's education fees.

From Jan 1, 2028, expats will no longer be able to enjoy the tax-free treatment of housing subsidies, language training and children's education fees. 

Wages and salaries earned by foreign experts who meet certain conditions may be exempt from individual income tax. 

 

For further inquiries regarding tax services, please contact Shanghai's tax hotline at 12366.

 

Source: Government Online-Offline Shanghai