China Individual Income Tax – Here’s What to Know!

 

China Individual Income Tax

Each individual who earns money needs to pay Income tax. Whether you reside in your own country or a foreign country, it’s mandatory to pay the amount on time. But the taxation rules vary according to the country. And in China, it’s quite complex.

Are you going to be a taxpayer in this country? Then it’s a must to be well aware of the China Individual Income Tax first. And that’s where this article can help. So, keep on reading!

What is Individual Income Tax?

Individual Income Tax refers to a tax levied on salaries, wages, and other income of a person. This type of tax is the source of revenue for the government. This tax rate increases with income. It means those who earn high income give more tax as compared to low-income people.

Now, let’s know about how this taxation works in China in the following lines.

How Individual Income Taxation Works in China

The State Administration of Taxation (SAT) uses two criteria to determine whether the person is tax-resident or non-tax-resident. One of its criteria is to check if the individual has a domicile in China. The other criterion is if the person has been residing in China for family or economic reasons for 183 days or more.

However, the Income Tax rules for domiciles and non-domiciled differ. Domiciles need to pay tax on worldwide income. On the flip, non-domiciles need to pay tax on the income from China.

There are nine tax categories work in China. These are applied for both residents and non-residents. However, the categories are

  • Employment income
  • Author’s remuneration
  • Royalties
  • Business income
  • Remuneration for labour services
  • Rental income
  • Incidental income
  • Income earned from transferring of property
  • Interest, dividends, and profit distribution

Non-domiciles can pay tax on all the nine categories separately. And they need to give the amount monthly.

On the other hand, domiciles have to pay the annual tax on the comprehensive income. It consists of employment income, author’s remuneration, royalties, remuneration for labour services. They will also have to pay their tax monthly. And it’s usually based on the business income, rental income, income from the property transfer, etc.

Take Professional Help Here to Pay Your Tax

Need Professional help regarding China Individual Income Tax? Get in touch with APAC Taxation, a reliable tax firm. Here, tax experts specialize in taxation services for foreigners and foreign companies. Visit apactaxation.com to know more in this regard.

Location: 66 Wing Lok St, Sheung Wan, Hong Kong

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