The deadline for the 2020 individual income tax filing was on June 30, 2021! The filing forms are available from March 1 of each year and are due by June 30 for the activity of the prior year. Some people have gone to a tax office near them and requested to submit the tax filing late. The tax office agreed in some cases but not in others. Related advice on this can be found throughout this article.Generally speaking, the “new” Chinese system is similar to that of the American system. The employer will deduct taxes from your salary and act as an agent to submit the taxes to the government. Then, you will reconcile in the beginning of the next year. The only difference is that the form for the deductions and the form to file your returns are simple enough that it can be done on your own!In this article we will address the following topics:-registration process for foreigners to use the individual income tax APP and website,-common useful functions on the APP and website, and-common questions or issues and recent concerns by expats regarding the Chinese “new” tax policy.Before the below steps you should make sure that your phone number is up to date on your bank account.Download the individual income tax APP: 个人所得税.The app looks like a blue shield logo and there is no English APP available.Foreigners are unable to register by themselves via the APP or website.Proceed with your passport to any tax office in the city that you live and work.The procedures there are simple. At most locations you draw a number and show your passport and the officer will give you a registration code. Most officers will even help you to register in the APP.Before obtaining a registration code, we would suggest that you ask the officer for a copy of your tax records first to make sure that the name they input into the system matches what they have on file.If you have obtained a new passport during your time in China, we would suggest you bring both passports.We also suggest that you register in the system as soon as possible to sort out any issues before the full implementation of the “new” tax system. Please review the related points to this later in the article below.Below are the four common features you will need in the APP.
The first two are for reporting/filing. The first one is to file your returns. The second one is to file your deductions. Of course you would have to file for the deductions before you file the return. The latter two (third and fourth one) are to check your tax payments from your salary and to check your deduction history.The APP is most useful for checking the history of payments. The website is easier for the filings because documents and proofs may be required. For example, if you are claiming the deduction due to elderly parents you will need their passport copies available and other related appropriate proof for other deductions. This said, we would advise you to be careful when claiming deductions due to the specific wording because if detailed proof is required later and you are unable to provide satisfactory proof, it could be a problem. The individual income tax website is:After you log in, when you scroll down you will find icons for the common features, most of which are the same.
In order from left to right:-Annual settlement (domestic comprehensive income): Annual settlement declaration of individual compressive income of residents (only applicable to domestic comprehensive income)
-Annual settlement (applicable for overseas income): Annual settlement declaration of individual comprehensive income of residents
-Additional deduction report: Report of special addition deduction for children’s education and continuing education, etc
-Operating income (table a): Monthly or quarterly payment declaration of income from production and operation and contracted and leased operation
-Operating income (table b): Annual remittance of declaration of income from production and operation and contracted and leased operation
-Tax record issuing: Online query, download and print of paid in records
-Special additional deduction records: query of filled in special additional deduction records
-Declaration and inquiry: Inquiry of completed declaration form
The deduction categories are as follows:-Expenses related to children’s education in the stage of preschool education or full-time academic education can be deducted as a fixed amount-Expenses of continuing education for academic qualifications (degrees) and professional qualifications in China can be deducted as a fixed amount-Interest expense of housing loan can be deducted according to the regulations if person, spouse, or both parties meet the regulations-Housing rent can be deducted if you have no self-owned housing in the city you are working in, the housing rent expenses can be deducted as a fixed amount-Other circumstances such as supporting the elderly and supporting their parents aged 60 or above can be deducted according to the regulationsYou can click into the related categories online when you file for your deductions to check the details and limitations. Some deduction categories have minimums or maximums.Obtaining your tax recordsA frequently asked question by many people is to check if their employer has been paying the tax for them and/or they may need a print out of an official copy of the tax record for various purposes. -You can do a quick search of the tax record history from the APP. It will show monthly how much salary has been reported and the tax payments submitted, if any.
-You can view and print an electronic official document from the website.
-You can go to the tax office (with your passport) for an official hard copy document of your tax record.
If the records show taxes were not being paid….If it shows that your employer has not been paying your taxes, it is important that you not freak out because there may be some common reasons for it (such as the name not matching your passport in the tax system or the name between multiple employers being inconsistent, passport number changes, etc). It is possible that you may have multiple accounts with the tax office and the name appearing differently. However, we importantly note that the employer can submit taxes on your behalf retroactively (after the fact) and it will be processed appropriately and divided into the monthly related payments with the tax office.If you go to the tax office to sort out money that is due…When you go to tax office to sort out an issue, you should bring as many related documents as possible. If the records show that you owe a lot of taxes, then you can under the “old” system, you can prove your way to reduce this amount. For example, if the salary and housing allowance, travel allowance, or other reimbursements are paid together, you are likely charged tax on both, but with related proofs this can be reduced. This being said, it is important that you sort out any issues before the “new” system takes effect. Do I need to find a local accountant?There is no need for a local accountant to assist you in filing your tax returns. The form is user friendly and simple asking for several required pieces of information and related documents before you submit. Recent concerns by expats regarding the Chinese tax policy…Recently, many foreigners have become concerned about the changes to the Chinese tax policy. The “new” policies for foreigners will be effective next year. In fact, this is not news, when this “new” tax policy was announced a couple of years ago, it was also announced that there would be a transition period for foreigners. During the transition period foreigners could still use the “old” system, which was more beneficial or appropriate for foreigners. However, starting next year this will no longer be the case. Many expats are concerned that they will be subject to higher taxes for benefits provided by their employer which either do not count under the “new” system or the maximum spend for deductible category amount is lower. The “new” system is exactly the same as the system that was implemented for Chinese nationals when the policies were announced.With special thanks to Sammy for his contributions to this article.
Authors:
Are you looking for more useful tips for your life in China? Get in touch with contributors for a consultation and follow us in our WeChat Group to receive the latest news. Expat Services (WeChat ID: ExS-SH) can add you into our WeChat group if you would like to ask the authors specific questions or concerns.
Julian is based in Shanghai but often travels for work and runs a company that works with individuals and organizations doing business between the US, China, and Africa. He has been based in China for a number of years.
Ikky is an R&D Manager working in Shanghai. He has been living in China for over 11 years.
Jatin (known by the nickname “Prince Jatin”) is a Multicloud DevOps Expert working in Shanghai. He has been living in China for over Nine years and owns four Indian communities WeChat groups known for "Helping Indians by Indians" with their specific inquiries regarding China affairs, he is also an active contributor to few other expat communities with expat work affairs based his knowledge and research expertise.
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