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China Tax and Tax Laws











Last partial update, March 2013

China Tax Rates 2013
  • The tax on an individual's income is progressive. As at , an individual's income is taxed progressively at 3% - 45%.
  • The corporate tax rate for domestic and foreign companies is 25%.
  • Small companies pay 20% corporate tax in certain cases.
  • Hi-tech companies pay 15% corporate tax.


China Capital Gains
  • An individual's capital gains are taxable in China at the rate of 20%.
  • Capital gains tax for a Chinese company is added to the regular tax.
  • A 10% deduction at source is made from the capital gains of a foreign company in China.
  • On taxing capital gains from the sale of real estate, when calculating the capital gain the purchase cost is deducted from the sale price at the 20% rate.


Table of Income Tax Rates in China for an Individual in 2013


Tax % Monthly Income (CNY)
3% 1 - 1,500
10% 1,501-4,500
20% 4,501-9,000
25% 9,001-35,000
30% 35,001-55,000
35% 55,001 - 80,000
45% 80,001 and above


  • The table relates to income from a salary. Income from other business is taxable at 5% - 35%.
  • Passive income such as interest and royalties is taxable at a standard rate of 20%.


  • Overseas Income in China
    • An individual and company who are Chinese residents are also taxed on their income outside China and receive a credit for overseas taxes.
    • Qualification for residence for an individual:
      Permanent residence in China while an individual who has no permanent residence in China but has lived in China for less than 5 years is taxed on his income in China, or overseas income that has its origins in China.
    • Individuals staying in China more than five tax years are taxed on their worldwide income too.




    Reporting Dates and Payment in China

    • The tax year in China ends on December 31. It is compulsory to file a report and pay advances monthly or quarterly (monthly for individuals).
    • The date for submitting an annual report and arranging payments is up until May 31. There are fines on arrears. Foreign companies in China are obligated to submit an interim report every three months (advance payments should be paid within 15 days of the end of the quarter).
    • In most cases when the annual income is less than CNY 120,000 an individual whose entire income in China is from a salary or whose income is subject to a deduction of tax at source is exempt from submitting an annual report.
    • An employer is obligated to submit a monthly report on his employees' wages and to pay the tax deducted within 7 days of the end of the previous month.


    DEDUCTION OF TAX AT SOURCE

    Taxation of Employees in China
    • An employer is obligated to deduct tax at source on a monthly basis from a salaried employee and to make additional contributions to social security.
    • Social security in China consists of 3 parts, basic pension, personal accounts and additional payment.
    • The rates for social security vary in different cities.
      Rates in the major cities are employer - around 30%, employee around 11%.


    Other deductions in China
    The following payments to non-residents are subject to a deduction of tax at source:
    • Dividend - 10%.
    • Interest - 10%, (plus 5% business tax)
    • Royalties -10%, (plus 5% business tax)
    • Capital gains -10%


    Comments:
    • Deductions at source for payments to foreign residents is subject to the Double Taxation Prevention Treaty.







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