Tax on income seems to be a confusing topic for a lot of foreigners in China. In fact, it's pretty straightforward by international standards, though one significant difference from most Western countries is that it is calculated on a monthly basis rather than an annual one.

Foreigners are given a higher tax free allowance (4800RMB per month) than locals (2000 RMB per month), mainly because they don't enjoy the same rights in terms of health and education. So, the first 4800 RMB of a foreigner's monthly income is tax free. The income above this is taxed according to a progressive scale from 5% to 45%. The bands are as follows:

Income of 500 yuan or less - 5%
That part of income in excess of 500 to 2, 000 yuan - 10%
That part of income in excess of 2,000 to 5, 000 yuan - 15%
That part of income in excess of 5,000 to 20, 000 yuan - 20%
That part of income in excess of 20,000 to 40, 000 yuan - 25%
That part of income in excess of 40,000 to 60, 000 yuan - 30%
That part of income in excess of 60,000 to 80, 000 yuan - 35%
That part of income in excess of 80,000 to 100,000 yuan - 40%
That part of income in excess of 100,000 yuan - 45%

Source: http://english.tax861.gov.cn/zgszky/zgszky09.htm

Maybe this looks a little confusing. In practice it means if you earn 5000 yuan a month, you get the first 4800 tax free and pay 5% on the remaining 200 yuan. That results in a tax payment of 10 yuan a month.

If you earn 6000 yuan a month, it's a little more complicated, but not much. You pay nothing on the first 4800 yuan, 5% on the next 500 yuan, and then 10% on the remaining 700 yuan. So, you pay 25 yuan (5% * 500) plus 70 yuan (10% * 700), which gives a total of 95 yuan.

Taking a salary of 30,000 RMB a month as an example, we would see rates of 5% to 25% applied. The total taxable income is 25,200 (30,000 - 4800). The first 500 is taxed at 5%, the next 1500 is taxed at 10%, and then the following 3000 is taxed at 15%. The next 15,000 is taxed at 20% and the remaining 5,200 is taxed at 25%. That breaks down as:

500*5% = 25
1500*10% = 150
3000*15% = 450
15000*20% = 3000
5200*25% = 1300

This gives a total of 4925 yuan in income tax on a salary of 30,000 yuan a month.

For other incomes it looks like this:
(income per month : tax)
4800 : 0
5000 : 10
5500 : 45
6000 : 95
6500 : 145
7000 : 205
7500 : 280
8000 : 355
9000 : 505
10000 : 665
12000 : 1065
14000 : 1465
16000 : 1865
18000 : 2265
20000 : 2665
25000 : 3675
30000 : 4925
40000 : 7425
50000 : 11235
100000 : 27705

There are some items that are tax deductible, most notably housing and work related transportation, but you need to make sure you have acceptable receipts (not always easy) and that the tax bureau accepts them, something that could vary from region to region. You might also find that your HR department doesn't want the hassle involved when the benefit is yours alone.

Thanks for the info.

We've created a simple little tax calculator using the info you provided. Anyone can check it out by going here:

http://chinajobline.com/index.php/tax-calculator.html

Is this current as of 2010? As a 'foreigner" I've been teaching English (part time) at Web International. They have deducted random amounts of tax although their stated formula is the 5.55% of the first 800 RMB then 20% of amount above 800. If the posted amount is current, then they have way overcollected from me.

Please advise - ChinaESLteacher

The figures are current, but they are for full-time legal work . As far as I know, foreigners can't legally get part-time work. You might be paying tax as a "service provider", but it should be you going to the tax bureau and paying that (and admitting you are working illegally), not them.

Based on the percentages, it sounds like they are taking money out on a service fapiao charge, and then the maximum income tax for private contractors for everything over 800 RMB. To me, it sounds like they are paying somebody else to provide a fapiao so that they can say they spent your salary money legally, and therefore use it to lower the amount of taxes they are paying. Still seems quite strange, and I've never heard of another school doing this.

The (Web International English) hired me as a part time teacher with a written contract. Later they decided that they did not want part time teachers. I enjoyed the students and course ware that they have, but their administration, cryptic communication and random pay calculation has been quite frustrating.

Actually, they owe me lots of RMB for improper tax calculation and wages. What recourse do foreigners have to file complaints against employers and or obtain the correct wages? Anything?

Contract or not, if it is just a part time contract, and they are not officially employing you through your working visa, I don't think there is much you can do. Conversely, there isn't really anything they can do if you find another job and tell them to screw themselves.

Contract or not, if it is just a part time contract, and they are not officially employing you through your working visa, I don't think there is much you can do. Conversely, there isn't really anything they can do if you find another job and tell them to screw themselves.