As we know that the Chinese government need to open the China market to the world, the China's government published a lot of preferential policies and regulations to make contribution to the whole market. One of them is about the China tax allowance.
The Chinese Tax Bureau allows foreign staff to deduct certain “allowances” before calculating the tax burden on their monthly salary. Each month the employee should produce evidence to show the company that this money was indeed spent on the services described in the contract; this is done using the ubiquitous “fapiao,” or official invoice, that should be received whenever an official monetary transaction is completed in China.
Allowance as a salary proportion --- China tax allowances
One key point is how much of a foreign employee’s salary can be allocated to allowances. This is something that is not clearly defined by the law, which stipulates that the allowances should be “reasonable.” In practice, about proportion of 30 percent of the total salary of the foreign employee and classify this portion as allowances.
Let’s look at the deductions that are allowable one-by-one for the Foreign Employees in China
Meal allowance;
Housing allowance;
Laundry allowance;
Children’s education allowance;
Home visit allowance.
Turnover taxes
This includes three kinds of taxes, namely, Value-Added Tax, Consumption Tax and Business Tax. The levy of these taxes is normally based on the volume of turnover or sales of the taxpayers in the manufacturing, circulation or service sectors. All the tax types could have the chance to give the tax allowance.
Contact us
if you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com.
Previous：China Contract Management
Next：China Taxation Overview