Articles

China’s Taxation System

By Celestine Loh, Date published: 2021-03-23

Everything you need to know about how the China taxation system works

beijing, china

The China taxation system has been constantly undergoing changes to ensure the country is able to prosper in the global economy. It is framed in a manner to ensure a stream for government revenue which in turn contributes back to the thriving and growing China economy. 

The overall tax system is managed by numerous state bodies. Namely, the National People’s Congress (NPC) and its Standing Committee, State Council, Ministry of Finance (MOF), State Taxation Administration (STA), State Administration of Foreign Exchange (SAFE) and General Administration of Customs (GAC). The State Taxation  Administration (STA) is the highest tax authority in China.  

Almost annually since 2006, China has revised its taxations system to become more integrated and comprehensive. Implementing multiple tax systems that encompass different industries, formalising many processes. It is important as a businessman to understand the strong framework for taxes in China in order to conduct business smoothly. 

Individual taxes are due on the 15th of the following month while annual individual income tax returns will be done from 1st March to 30th June of the following year. For business corporate taxes, the same timeframe is followed.

As China continuously reinvents their business environment, it is imperative that aspiring business leaders trying to break into the Chinese market know about the taxation system and follow closely its rules and regulations. 

China Tax Rates:

Individual Taxes*

Annual Taxable Income (in Chinese Yuan)

Monthly Taxable Income (in Chinese Yuan)

Tax Rate

0 to 36,000

0 to 3,000

3%

Over 36,000 to 144,000

Over 3,000 to 12,000

10%

Over 144,000 to 300,000

Over 12,000 to 25,000

20%

Over 300,000 to 420,000

Over 25,000 to 35,000

25%

Over 420,000 to 660,000

Over 35,000 to 55,000

30%

Over 660,000 to 960,000

Over 55,000 to 80,000

35%

Over 960,000

Over  80,000

45%

*A standard 20% tax rate is applied on all other aspects of income taxes (rental income, interest income, dividends, capital gains, etc)

Corporate Tax

Annual Taxable Income (in Chinese Yuan)

Tax Rate

0 to 30,000

5%

Over 30,000 to 90,000

10%

Over 90,000 to 300,000

20%

Over 300,000 to 500,000

30%

Over 500,000

35%

In a nutshell, this is how China’s taxation system works. 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

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Tags: China | taxation

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