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Hike in personal income tax threshold not to benefit expats in China
By TII News Service
Aug 02, 2011 , Beijing |
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TAX experts have clarified that the Chinese Govt's decision
to hike the personal
income tax threshold will not benefit the expatriates working in China.
With effect from September 1 this year, the government has decided to increase
the monthly personal income tax threshold to RMB3,500 (USD 544), from
the current level of RMB 2,000. That rise in the threshold is applicable
to both residents and non-residents alike.
Foreigners employed in China presently also benefit from an additional deduction
for expenses of RMB 2,800. However, that deduction will be reduced to RMB
1,300 from September 1, or by the same amount as the increase to the threshold.
In that case, the total threshold for expatriates will remain at RMB 4,800.
The new law reduces the previous nine tax brackets to seven,
eliminating the brackets with tax rates of 15% and 40% with the top rate of
tax remaining at 45%. It is speculated that most expatriates will be liable
to pay more tax considering the fact that their incomes are higher.
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