| chinese income tax question for non china resident | |
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| Feb 12, 2015 00:41 |   |
| guest41643 | I'll be going to china to teach some workshops. I'll stay no longer than 15 days. I'll be going no more than twice in a year. What's my tax liability? How do I pay it? does it matter if I'm working as a single person or a subcontractor for an S corp? |
| Feb 20, 2015 11:05 | #1 |
 | Hi, I am a Certified Accountant in Guangzhou. In China, who stay time less than 270 days in one year is called non-resident tax payer. According to your short term journey, you are one of them. If you work as a single person, tax liability is based on your gain from teaching. Tax rate is 20% (gain is less than 20000 RMB), 30% (gain is between 20000 and 50000 RMB) or 40% (gain is above 50000 RMB) If you work as a subcontractor, tax liability is based on your profit of operation. If profit is below 15000 RMB, Tax rate is 5%. If profit is above 15000 RMB, the calculation is complicated. In short, I suggest you working as a single person. Normally, your client has already paid your tax to Authority before you get paid. If you work as a subcontractor, you have to declare the tax by yourself which costs you time and money. Hope this helps you! |
| Feb 20, 2015 11:48 | #2 |
| GUEST41643 | First, thank you so much for your clarity. I've been hunting around in the U.S. for this information and so called "international accountants" have not been able to give this to me. Second, Is there any legal way to minimize the chinese tax liability? I'm aware that there is a DTA with the U.S. that allows me to apply for Foreign Income Tax Credit but it appears there might not be enough "take home" pay from the potential 40% tax fee to make it worth the effort of working there. |
| Feb 23, 2015 07:19 | #3 |
| Hi, Guest41643. I do more research for your question. Tax rate is slightly different in different cities in China. The type of business you in influences the tax rate, too. And I believe that in your situation, the corporation which gives you payment has the legal obligation to do the tax declaration on behalf of you, and give you the receipt as evidence. The tax rate and detail process is set by the City Tax Authority where you provide the service. So your contact window should be Tax Accountant of the company you work with in China. Actually, I do not think I know your situation well. If you want to tell me more, I can do more specific assessment and estimation. If yes, please contact me via email: danyoungcpa.com|danicamai. Danica MAI |
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