China - Tax Guide for Freelance Contractors
Welcome to our guide to Chinese Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, China.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in China. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in China.
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Tax Residents in China: are liable to pay Chinese tax on their worldwide income,
Non tax residents in China: are liable to pay tax only on their Chinese-source income,
Non-domiciled in China (more than one year and less than five consecutive years): are liable to pay tax on their Chinese-source income as well
as on foreign income borne by a Chinese entity,
Non-domiciled in China (more than five consecutive years): are liable to pay tax on their worldwide income.
Individuals will be regarded as tax residents:
- if they are domiciled within Chinese Mainland for more than one year,
- if they are usually or habitually residing in China,
- if they have their household, family or their economic interest in China.
Domiciled: refers to a resident within Chinese Mainland for more than one year,
Non-domiciled: refers to a resident staying in China for more than one year but less than five consecutive full tax years.
Married persons are taxed separately, joint filing is not permitted.
Taxable income includes:
- employment income,
- production and business income,
- income deriving from contracting for or leasing operations of companies,
- royalty income,
- interest income,
- dividends and bonuses,
- income deriving from leasing property,
- income deriving from assignment or transfer of property,
- contingency income,
- unemployment insurance premiums paid by a company in excess of the premium rates specified by law,
- other income specified as taxable by the finance department of State Council.
Deductions and allowances for 2010
Different categories of income qualify for different deductions and allowances permissible for 2010 including:
For wages and salaries received in China:
- monthly deduction of RMB 2’000,
- for foreign individuals, an additional deduction of RMB 2’800,
- for domestic individuals, personal basic contributions including housing funds, medical insurance, pension and unemployment insurance payments.
Income tax rates for 2010:
For salaries and wages, they are nine progressive tax rates ranging from 5% to 45%.
- 5.00% for the first RMB 500,
- 10.00% from RMB 501 up to RMB 2’000,
- 15.00% from RMB 2’001 up to RMB 5’000,
- 20.00% from RMB 5’001 up to RMB 20’000,
- 25.00% from RMB 20’001 up to RMB 40’000,
- 30.00% from RMB 40’001 up to RMB 60’000,
- 35.00% from RMB 60’001 up to RMB 80’000,
- 40.00% from RMB 80’001 up to RMB 100’000,
- 45.00% over RMB 100’001.
Dividends, royalties, income from leasing property, income from leasing property, income from the transfer or assignment of property and contingency income are taxed at 20%.
Filing date:
Annual tax return should be filed within three months of the end of the tax year for individuals who have resided in China for a full tax year and whose annual income exceeds RMB 120’000.