foreigners working in China: full analysis of personal income tax threshold and related policies

In the context of globalization, more and more foreigners choose to work in China, and inject new vitality into china's economic development. For these foreign workers, understanding and making reasonable use of China's personal income tax policy will not only help reduce the tax burden, but also better plan their personal finances. Among them, the personal income tax threshold, as the basis for calculating taxable income, is an aspect that foreigners are particularly concerned about.

History and current status of the 1. personal income tax threshold for expatriates

In the past, the personal income tax threshold for expatriates working in China was once higher than for domestic employees. For example, it is stipulated that the threshold of personal income tax for foreigners is 4800 yuan per month, that is, an additional deduction of 1300 yuan is made on the basis of the monthly deduction of 3500 yuan. However, with the revision and improvement of the personal income tax law, this policy has changed significantly.

According to the latest personal income tax law, the personal income tax threshold for foreigners working in China has been adjusted to be the same as that for domestic employees, that is, 5000 yuan per month. This adjustment means that foreigners and domestic employees will use the same deduction standard when calculating taxable income, reflecting the principle of tax fairness.

How to Calculate Personal Income Tax for 2. Foreigners

After the threshold is specified, how do foreigners calculate their personal income tax payable? This mainly involves the calculation of taxable income and the choice of tax rate.

1. calculation of taxable income :
   taxable income = amount of wage income-various social insurance premiums-threshold (5000 yuan)
   it should be noted here that the amount of wage income should include all wages and salaries earned by foreigners during their work in China, and income from remuneration for services, remuneration for authors and royalties. At the same time, the various social insurance premiums refer to the social insurance premiums payable by foreigners in accordance with the provisions of Chinese law.
2. Choice of tax rate :< br/> The personal income tax rate table applicable to foreign employees is the same as that of domestic employees, and the excess progressive tax rate system is adopted. Specific tax rates and quick deductions vary according to the range of taxable income. For example, if the monthly taxable income does not exceed 1500 yuan, the tax rate is 3%; for the part exceeding 1500 yuan to 4500 yuan, the tax rate is 10%, and so on, the highest tax rate is 45%.

Special additional deduction for 3. expatriate personal income tax

In addition to the basic deduction standard, foreigners working in China may also enjoy some special additional deductions. These policies are aimed at further reducing the tax burden on taxpayers and raising the real income level of residents. The special additional deductions that foreigners can enjoy mainly include:

1. children's education : children of foreigners who receive education in China can enjoy special additional deductions for children's education. This includes pre-school education, compulsory education, Senior high school education and higher education and other stages.
2. continuing education : foreigners who receive academic (degree) continuing education or non-academic continuing education in China, such as vocational qualification continuing education, can also enjoy the corresponding special additional deduction.
3. serious illness medical treatment : the serious illness medical expenses incurred by foreigners or their spouses and minor children in China can enjoy special additional deduction for serious illness medical treatment if certain conditions are met.
4. Housing loan interest : Foreign nationals who purchase their first home in China and incur housing loan interest expenses can enjoy a special additional deduction for housing loan interest.
5. Housing rent : For housing rent expenses incurred without their own housing in China, foreigners can also enjoy a special additional deduction for housing rent.
6. support for the elderly : foreigners who support the elderly with legal support obligations in China, such as parents, grandparents, etc., can enjoy a special additional deduction for supporting the elderly.

4. the declaration and payment of personal income tax for foreign personnel

During the period of working in China, foreign personnel should follow the provisions of Chinese tax law, timely declaration and payment of personal income tax. This usually involves the following steps:

1. understand the tax policy : foreigners should first understand China's personal income tax policy, including the threshold, tax rate, special additional deductions and other specific content.
2. prepare declaration materials : when declaring personal income tax, foreigners need to prepare relevant declaration materials, such as payroll, social insurance premium payment certificate, special additional deduction certificate, etc.
3. Make a tax return : Foreign nationals can make a tax return through the e-tax office or go to the local tax authority. In the declaration process, should truthfully fill in personal information and taxable income and other relevant content.
4. Pay taxes : According to the declaration results, foreigners need to pay the personal income tax payable on time. Taxes can be paid by bank transfer, online payment, etc.

Practical Case of 5. Individual Income Tax Policy for Foreigners

Take a foreign employee who works and lives in China for a certain number of days, it constitutes an individual resident. His monthly salary is 20000 yuan and his social insurance premium is 2000 yuan. After understanding the personal income tax policy, he chose to enjoy two special additional deductions for children's education and housing loan interest, with a total deduction of 3000 yuan per month. So, how much personal income tax should he pay each month?

First, calculate the taxable income:
taxable income = amount of salary income-various social insurance premiums-threshold-special additional deduction
= 20000 yuan -2000 yuan -5000 yuan -3000 yuan
= 10000 yuan

then, select tax rate and quick deduction according to taxable income:
the tax rate corresponding to taxable income of 10000 yuan is 10%, and the quick deduction is 210 yuan.

Finally, calculate the personal income tax payable:
taxable amount = taxable income x tax rate-quick deduction
= 10000 yuan x 10% - 210 yuan
= 790 yuan

therefore, the monthly personal income tax payable by the foreign employee is 790 yuan.