How to Calculate Your Tax in China as an ESL Teacher
The tax system in China might be relatively confusing as a foreigner or new comer but it doesn’t have to be. We will try to break down how to calculate your tax in China as an ESL teacher for you. Keep in mind that many schools often advertise a salary based on before tax. This will be clarified during the interview so you have a better idea of your full salary.
Generally, you won’t have to worry about your income tax as this will naturally be deducted every month from your salary. You will be pleased to know that the taxable amount is usually comparably low compared to your home country.
Foreign and Resident Taxes differ
According to Chinese tax laws as of the 1st of January 2019, foreign workers that are living and working in China for more than 5 consecutive years shall be considered a legal tax resident of China and therefore have Chinese resident tax laws applicable to them. As a legal resident, by law you are required to contribute to taxes commencing on the 183rd day of their 6th year in China.
However, if the foreign worker leaves China for a period of a full 31 days, the factors necessary to qualify as a tax resident will be reset. To clarify, if you reach a 6th year with uninterrupted leave. You will be considered a resident, However, foreigners that leave China for 31 consecutive days prior to the 6th year commencing shall still be considered Non-residents.
So how is the tax calculated?
If you earn less than 4,800 RMB per month (700 USD), then you are not liable to pay individual income tax. 4,800 would be outside of the taxable brackets. However, any amount over this means you are going to be paying tax. This will be based on your overall earnings and would be higher with higher salaries.
As most of our positions are above 10,000 RMB (1,450 USD), you will likely need to pay.
A simple equation for the exact amount of taxable income would be:
Monthly income – 4,800 = Taxable income
| Gross Monthly Income (RMB) |
China Income tax rate (%) 2019 |
Deductions (RMB) |
|
1 – 2,999 |
3% |
0 |
|
3,000 – 11,999 |
10% |
210 |
|
12,000 – 24,999 |
20% |
1,410 |
|
25,000 – 34,999 |
25% |
2,660 |
|
35,000 – 54,999 |
30% |
4,410 |
|
55,000 – 79,999 |
35% |
7,160 |
|
80,000 and over |
45% |
15,160 |
Taxable income = income – tax exemption (4,800)
Monthly tax formula: (taxable income * tax rate) – quick deduction = tax
Example: (10,000 – 4,800) * 10%) – 210 = 290 RMB in taxes per month
Does how long I stay in China influence my tax?
Yes, there are quite a number of factors that will influence it.
- If you live in China for more than 5 consecutive years, you will pay full tax on your worldwide income.
- If you are in China for less than 90 days within a tax year, and your income comes from overseas. Assuming you have no permanent base in China, you won’t need to pay taxes. This is not applicable to teachers who will be living in China.
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