China Individual Income Tax and Social Insurance Calculator
Individuals working in China – both Chinese and foreign – are required to pay individual income tax (IIT) on their earnings.
The updated tax brackets and standard deductions stipulated in the new law took effect on October 1, 2018, while the remainder of the new provisions will come into force from January 1, 2019.
The International Payroll and Human Resources team at Dezan Shira & Associates has developed a simple calculator to help employers and employees calculate their monthly IIT and social insurance obligations.
With the latest changes, Chinese and foreign taxpayers are increasingly treated similarly for tax purposes. Nevertheless, important differences remain.
Chinese citizens must pay IIT on all income sourced both domestically and overseas (unless stipulated otherwise in a tax treaty), while in most cases foreigners are still only required to pay IIT on income derived in China.
IIT in China is levied at a progressive rate, ranging from three percent for monthly taxable incomes of RMB 1,500 (US$240) or less, to 45 percent for taxable incomes greater than RMB 80,000 (US$12,725). A complete breakdown of IIT rates in China can be found here.
In addition to IIT, employers and employees in China generally must contribute social insurance payments. In some jurisdictions, foreign employees can opt out of social insurance payments, such as in Shanghai.
IIT and social insurance payments are usually withheld by employers and paid to tax authorities on a monthly basis. However, employees are advised to calculate their IIT and social insurance obligations to gain a clear understanding of their salary packages and ensure that they are being paid the correct amount.
Please note that while this calculator is based on publicly available information and tax laws, and was verified by China-based HR and tax professionals, this calculator should be used for research purposes only.
Several considerations should be taken into account when calculating IIT and social insurance obligations, including regional differences, local incentives, the taxpayer’s country of origin, and the taxpayer’s salary structure, among others.
Further, we note that social insurance contributions are subject to annual reforms; the payment base is calculated from the previous years’ annual salary and the payment rate could be revised.
Individuals and employers are therefore advised to contact HR professionals for further information regarding IIT and social insurance payments.
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