ГРУПКОД-АНГ

Calculation of personal income tax in China

Usually, when calculating, they use online calculators, for example, on the site:

https://www.gerensuodeshui.cn

#personal income tax

According to paragraph 2 of article 1 of the Personal Income Tax Law, individuals who reside in China must pay income tax in accordance with the provisions of this law on income received in China.

 

In accordance with the above general provisions, the remuneration of foreign individuals is domestically sourced, and personal income tax is withheld and paid by the company in which they work.

 

In the case of withholding income tax on income from payment for services of foreign individual labor, a distinction is made between resident individuals and non-resident individuals.

 

According to the "Notice of the State Administration of Taxation of the People's Republic of China on the Introduction of Administrative Measures on the Declaration and Withholding of Personal Income Tax" (Announcement of the State Administration of Taxation No. 61 of 2018), when a withholding agent pays a resident individual the income from labor services, he must withhold and preliminarily pay taxes on a one-time or monthly basis.

 

Methodology for calculating personal income tax on wages in 2022:

 

Income tax = taxable income * tax rate

 

Taxable income = monthly income - 5,000 yuan (non-taxable threshold) - special deductions - special additional deductions - other deductions specified by law.

 

Gross income is the sum of wages, salaries, royalties and royalties. These four incomes should be added together in the calculation.

 

However, after using your monthly gross salary minus the base deduction for expenses of 5,000 yuan, which amounts to a tax exemption of 5,000 yuan, if your monthly salary is less than 5,000 yuan, you do not pay taxes.

 

Then some special deductions are deducted, that is, three insurances and one housing fund, including pension insurance, health insurance, unemployment insurance and housing fund.

Some of these four items are paid by the company for you, and the rest must be deducted from your salary.

 

The new tax law adds 6 points for provisional tax deductions, namely children's education, continuing education, medical treatment for serious illnesses, housing loan or rental interest, and expenses for supporting the elderly.

 

The above items are available to everyone, and some to some, such as commercial health insurance, corporate annuities, etc., which must be deductible before tax.

 

New table of annual tax rates:

 

1. If the salary range is RMB 1 to RMB 5,000, including RMB 5,000, the applicable income tax rate is 0%;

 

2. If the salary range is between RMB 5,000 and RMB 8,000 including RMB 8,000, the applicable income tax rate is 3%;

 

3. If the salary range is between RMB 8,000 and RMB 17,000, including RMB 17,000, the applicable income tax rate is 10%;

 

4. If the salary range is RMB 17,000 to RMB 30,000 including RMB 30,000, the applicable income tax rate is 20%;

 

5. If the salary range is between RMB 30,000 and RMB 40,000, including RMB 40,000, the applicable income tax rate is 25%;

 

6. If the salary range is between RMB 40,000 and RMB 60,000, including RMB 60,000, the applicable income tax rate is 30%;

 

7. If the salary range is between RMB 60,000 and RMB 85,000, including RMB 85,000, the applicable income tax rate is 35%;

 

8. If the salary range exceeds RMB 85,000, the applicable income tax rate is 45%.

 

Example: If your salary is 8 thousand yuan, then personal income tax = (8000-5000)x0.03=90 yuan

TPL_IN
Created: 19 February 2022

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