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China: 1st Jan 2019 Tax Changes

Discussion in 'Teaching abroad' started by spanboy, Jan 15, 2019.

  1. spanboy

    spanboy Occasional commenter


    Now that we are a couple of weeks into the new year, has anyone got any concrete update on the changes?

    My school is looking into it and will let us laowei know what we should do 'soon'.

  2. the hippo

    the hippo Lead commenter Community helper

    The inverted commas are definitely needed around "soon". It can mean all kinds of things in the Middle Kingdom.
  3. Capricorn2412

    Capricorn2412 New commenter

    Non-taxable benefits such as housing, claiming against fapiaos for food, etc, will come to an end by 1st January 2022 and will no longer be tax-free. Salary and tax to be calculated on an annual basis rather than monthly at the moment.

    The new tax deductions however will be available through those are not as generous.

    Tax deductions will be made monthly as you accumulate income and move through the tax threshold. This means you will be taxed less in January but pay more tax in December. Your annual tax bill will not change, just the deductions will no longer be equal.
  4. february31st

    february31st Established commenter

    Capricorn can you send a link for the tax details if you have a good one. As I understand it you will require to have proof of expenditure to claim tax relief and this will depend on the number of children you have and medical bills. I haven't seen a clear description as of yet, not sure if we will get one before 2021.

    I am slowly heading for the exit door here in China myself to be out by 2020.
  5. spanboy

    spanboy Occasional commenter

    So, for the next couple of years at least, if you continue to have tax paid for by the school at source monthly, as at present, it shouldn't make any difference to take-home pay for the year - is that right?
  6. blueskydreaming

    blueskydreaming Lead commenter

    My Finance department said there are 3 extra things we can get tax relief on - but you can only choose one of them, and it's only tax relief on 1,000 rmb per month, which is about 220 rmb of tax saved:
    1. paying school or uni fees for a child, but not the fees at the school you work at (e.g. uni, or primary when you work in secondary);
    2. your financial contributions to a parent, if they're over 60, and this 1,000 relief is shared between your siblings;
    3. I can't remember this one.

    Basically it's very Chinese, so I feel like they've made a mistake. Why would a foreigner on £40-50k p.a care about saving 25 quid of tax per month.
  7. february31st

    february31st Established commenter

    These deductions are in the current tax reforms the year. Looks like others will be introduced in the next 3 years.

    Looks like expat and local tax regulations will become one and the same which is the norm in most countries.
  8. Capricorn2412

    Capricorn2412 New commenter

    No good luck I am afraid, been told the details are being worked out.
  9. Capricorn2412

    Capricorn2412 New commenter

    What they may have meant is that you can choose between what you currently get and the new reliefs offered. Any current tax free benefits will come to an end by December 2021. So best to stick with it and as Feb says, by 2022 the tax system will be one and the same for Chinese and foreign tax payers within China.
  10. Capricorn2412

    Capricorn2412 New commenter

    Yes, monthly net will change but total tax deducted is the same as before.




  11. spanboy

    spanboy Occasional commenter


    Tax deductions will be made monthly as you accumulate income and move through the tax threshold. This means you will be taxed less in January but pay more tax in December.

    Thanks. I don't really understand the logic of this - I could kind of understand it the other way, paying MORE tax to begin with, that then diminishes month on month e.g. like mortgage payments which initially recoup more interest than capital.
  12. amysdad

    amysdad Established commenter

    This will be interesting to see how schools respond. For example, the school fees - if they are taxable from January 2022, will schools cover the tax somehow at least until the end of that school year? Could schools move to make the staff kids' places in addition to the normal applicants rather than replacing them? Similarly, with home travel, will schools find a way to avoid the tax on this?

    And the expenditure on dependent parents allows a potentially big way of transferring money out of China, which is what the government was trying to avoid.
  13. february31st

    february31st Established commenter

    The new tax regulations do make sense as expats have had a big tax break to come and work in China. This time the Chinese are been given more cash in their pockets to spend to boost the economy.

    The extra tax deduction for giving your parents money to look after them in old age will be a warmly received by your average Chinese family, together with the school costs rebate. So the average Chinese family will be at least 500rmb/month better off than before.

    Getting 20000GBP worth of private education tax free on top of your salary and free accommodation is one of the hidden pleasures of international teaching. In some countries this is taxed as unearned income.

    I don't think the tax changes will impact to much in the next couple of years, in fact I gained 18000rmb due to the recent tax cuts.

    But I do think the writing is on the wall and thus giving expats time to relocate before the new changes and allowing businesses to modify their payment plans to foreign workers. This is how China works, you get at least 2 years warning of changes to regulations before they are implemented, this gives everyone time to adjust.

    Its just extra considerations to be made when you do the CBA of working in China. I do not feel the changes in tax regulations will impact your average teacher working in China as we do not earn that much in the first place compared to some expats working for large multi national companies.

    All I can see happening to me is I have to fill in one tax declaration every year and I need 1 extra form to complete before I can send money back to the UK.
  14. Capricorn2412

    Capricorn2412 New commenter

    It would be very difficult and a huge admin cost to move from monthly to an annual tax system and have the monthly payments remain constant, especially as majority of the population has variable monthly income. Also, it means everyone gets more net pay in time for CNY.
    spanboy likes this.
  15. amysdad

    amysdad Established commenter

    I wonder how schools are going to respond to this, particularly at the top end. Many are already finding it difficult to attract teachers to China and while this might be delayed for a couple of years I can see potential problems with is (I really don't fancy the idea of my pay varying by as much as 5000RMB between January and December.)

    And I wonder - if I set aside money for my parents in the UK, will that qualify for "dependent parents"? ;-)
    spanboy likes this.
  16. spanboy

    spanboy Occasional commenter

    I'm wondering if schools will take this on board internally but just continue paying equal monthly salaries to teachers? Then again, the academic year and the tax year don't tally do they, so probably not! We are still awaiting a response from our HR/Finance sections...
  17. spanboy

    spanboy Occasional commenter

    I suppose also that you get more net earlier on in the financial year rather than later...and can put the 'extra' aside if need be for any financial commitments arising past July...

    Also, will next year's contracts which state net monthly salary need amending to account for this progressiveness?
  18. february31st

    february31st Established commenter

    Interesting point Spanboy about the net pay conditions in a contract. I should imagine it will have to be rewritten otherwise how can you get a tax payment receipt that matches your monthly salary and you need this to send money home.

    I wonder if staff on NET salary contracts get the extra 1500rmb in their pocket with the tax cut or did someone in the financial office pocket the money.
  19. spanboy

    spanboy Occasional commenter

    We got the pay increase written into our payslips above board, but doesn't tally with the amount stipulated in the contract, of course.
  20. spanboy

    spanboy Occasional commenter

    Anyone got any concrete figures yet from their HRs re: the changes in method of monthly payment? Ours are putting together examples to show us next week and our HR reckon that, by the end of the year, we could actually have more Kwai in our pockets, and be paying less tax over the year than we currently do!?! I will believe it when I see it.

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