Salary, According to Chinese Fiscal Regulations

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Understanding Your Individual Income Tax

The income tax is deducted from your salary, according to Chinese fiscal regulations.

This tax is calculated by WHU and deducted from your brutto salary.

Your netto salary is sent into your bank account monthly or as determined through your employment contract.

China's taxation system is progressive. The more you earn, the higher the annual tax you have to pay.

Local employees are taxed on the basis of the balance of their monthly income after deducting their social benefits contribution, a standard deduction of RMB 3,500 and then applying the progressive tax rate as shown in the table on the right. The employer is obliged to withhold the full tax amount and submit the taxes to the appropriate Chinese authorities on behalf of its employees.

Taxable Income = Gross Salary – Social Benefits – ¥3,500

IIT = Taxable Income x Tax Rate – Quick Deduction

Net Salary = Gross Salary – Social Benefits – IIT

Taxable Income Tax Rate Quick Deduction Less than 1,500 3% 0 1,501 - 4,500 10% 105 4,501 - 9,000 20% 555 9,001 - 35,000 25% 1,005 35,001 - 55,000 30% 2,755 55,001 - 80,000 35% 5,505 Over 80,000 45% 13,505

Foreign employees

The incomes of foreign employees in China are taxed by the same progressive tax rates as the incomes of Chinese employees. However the important question is, when foreign nationals’ incomes are subject to Chinese individual income tax liabilities.

Tax Liability

The criterion used to determine a foreign employee tax liability in China is the duration of stay.

Another distinction has to be made between junior staff and senior executives.

Foreigners and Chinese from Hong Kong, Macao and Taiwan have to pay IIT on incomes derived from

Chinese sources for work in China if they have lived in the country for less than 90 days (183 days for citizens of countries that have signed a treaty on the avoidance of double taxation with China [1]). If a foreign employee has been living in China for more than 90 days (183 days) but less than a year, income for work in China from all sources is taxable. Foreign senior executives (e.g. Managers, Deans, etc.) However, are liable for their full income derived from Chinese sources from the first day in the country. For better understanding taxable income for longer periods of stay and for senior officials compared to ordinary employees please see the chart below.

Tax Chart for Foreign Employees

These include among others: the EU-25 (except Greece), Australia, Brazil, Canada, Hong Kong, India, Indonesia, Japan, Macao, Malaysia, New Zealand, Norway, Russia, Singapore, South Africa, South Korea, Switzerland, Thailand, USA, Vietnam

After knowing which incomes are subject to Chinese IIT, the calculation process is only slightly different from the one described for Chinese nationals. The same tax rates and tax brackets also apply to the incomes for expatriates working in China or for Chinese companies. Foreign employees may, however, deduct an amount of 4,800 RMB before calculating the tax payable according to the scheme above. Moreover, some allowances paid by the employer are not taxable [2].

[2] This includes allowances for home leave (only applied twice a year), language training, children’s education, housing rental, moving, food, washing of clothes and business trip expenses.

Source: JLJ Group http://www.jljgroup.com/page/en/78/Individual_Income_Tax_in_China.html

Salary Scheme for Foreign Employees at WHU

Your salary varies according to the position you fill, your academic credentials and the program based on which you've been hired at WHU.

One Thousand Foreign Experts Project

1,000,000 to 1,200,000 Yuan/year (158,500 to 190,300 U.S. dollars) to which you should add other financial incentives.

National High-end Foreign Experts Recruitment Project

100,000 to 120,000 Yuan/year (15,800 to 19,000 U.S. dollars) plus other financial incentives.

Thousand Talents Scheme

600,000-800,000 Yuan/year (96,500 to 130.000 US dollars) plus other financial incentives.

Thousand Youths Scheme

200,000-300,000 Yuan/year (32,200 to 48,300 US dollars) plus other financial incentives.

Yangtze River Scholars’ Program

300,000-500,000 Yuan/year (48,300 to 80,500 US dollars) plus other financial incentives.

Hubei Province Hundred Talents Scheme

300,000-500,000 Yuan/year (48,300 to 80,500 US dollars) plus other financial incentives.

Banking

Currency in China is Renminbi (abbreviated as RMB). The basic unit is Yuan and fractional currency is Jiao. RMB has different kinds of money forms of value such as 100 Yuan, 50 Yuan, 20 Yuan, 10 Yuan, 5 Yuan, 2 Yuan, 1 Yuan, 5 Jiao, 2 Jiao and 1 Jiao. Coins have such forms of values as 1 Yuan, 5 Jiao and 1 Jiao.

Bank of China, Wuhan Commercial Bank and Industrial and Commercial Bank of China are located beside the affiliated hospital on the 1st campus (Faculty of Humanities and Sciences). On the 2nd campus (Faculty of Engineering), Bank of China and China Merchants Bank locate opposite Tianyuan Restaurant; beside Ziqiang supermarket there is an Industrial and Commercial Bank of China; China Construction Bank is beside the campus gate at Chagang. All those banks offer deposit and deposit withdrawal services in RMB and Foreign Currencies of various kinds. Passport and Residence Permit are needed to open an account. There are 7 currencies that can be exchanged including USD, EURO, etc.

Bank of China offers the services of currency exchange (including traveler’s check and etc.) and deposit of RMB and foreign currencies. Passport a5nd Residence Permit needs to be provided for currency exchange. For more details, please consult with banks.

Banks on Campus

Bank of China Service Phone: 027—68772828 Location: Opposite Tianyuan Restaurant, 2nd campus (Faculty of Engineering), Wuhan University Working time: 8:30 am—16:30 pm, Monday to Sunday Deposit and withdrawal services of GBP, Hong Kong dollar, USD, EUR, JPY, CAD, AUD and CHF

Industrial and Commercial Bank of China Service phone: 027—68775745 Location: Beside Ziqiang supermarket, 2nd campus (Faculty of Engineering), Wuhan University Working time: 8:30 am—16:30 pm, Monday to Sunday Deposit and withdrawal services of USD, Hong Kong dollar and JPY

China Construction Bank Service Phone: 027—68776489 Location: on the left of the gate of Chagang, 2nd campus (Faculty of Engineering), Wuhan University

Working time: 8:30 am—16:30 pm，Monday to Sunday Services for foreign currencies are not available

China Merchants Bank Service phone: 027—68775535 Location: Opposite Tianyuan Restaurant, 2nd campus (Faculty of Engineering), Wuhan University Working time: 8:30 am—16:30 pm，Monday to Sunday Service offer: Only ATM is available

China Merchants Bank (Shuiguohu Branch) Service Phone: 027—87277572 Location: No.6, Dongyi road, Shuiguohu, Wu Chang District, Wuhan City Deposit and withdrawal services of USD, EUR, JPY and Hong Kong dollars 24-hour service of ATM is available for all the banks above