Wednesday, April 19, 2006

Income tax

It's income tax time in the US. Sun-Ling and I have to file a 2005 Federal tax return with a status of "living in a foreign country on Dec 31 2005". The whole thing is a bit tricky since we were in China for only 2 months of 2005. However with the help of Turbo Tax, I think I'll get it straight by June or so. ;-)

An additional twist is that Chinese companies do not provide something like a W2 with salary and tax totals for the calendar year. Wages and interest are taxed at the source on a monthly basis. Period. There are no refunds. No year end balancing. Your monthly pay statement is all you get.

The tax rates on monthly income are progressive. For PRC citizens, the first 1600 CNY per month is not taxed. For foreigners, it's the first 4800 CNY. After this "deduction", the rates are as shown below. [Reminder that 8.1 CNY = $1US.]

Table of Income Tax Rates in China for an Individual in 2005
Tax%..Income (CNY)
5% 1 - 500
10% 501 - 2,000
15% 2,001 - 5,000
20% 5,001 - 20,000
25% 20,001 - 40,000
30% 40,001 - 60,000
35% 60,001 - 80,000
40% 80,001 - 100,000
45% 100,001 and above


For more China tax info check out www.worldwide-tax.com/china/china_tax.asp

1 comment:

Anonymous said...

do they have something like social security tax and medicare tax?