Beijing Increases Income Tax Threshold For Foreign Workers

by Mary Swire, Tax-News.com, Hong Kong

09 February 2006

The Chinese authorities have increased the income tax exemption threshold for foreign workers employed in companies and organisations in Beijing, according to a local press report.

Quoting a source from the local tax office, the Beijing Times reported that the first 4,800 yuan (US$590) of income is now exempt from income tax, up from the former level of 4,000 yuan.

Those qualifying for the increased exemption include overseas nationals employed by foreign-funded companies operating in China, as well as overseas experts working for businesses, social organisations and government departments, the report stated.

There were approximately 65,000 foreign workers living in Beijing at the end of 2005, the report added.

China is preparing to make many important changes to the tax system in the coming years in order to simplify the regime and make it more equitable. One major change affecting foreign companies will be the introduction of a unified corporate tax rate some time in the next two to three years.

Foreign funded enterprises in China currently pay less corporate tax than their domestic counterparts.

China's State Administration of Taxation (SAT) will intensify its efforts to crack down on tax evasion this year and will concentrate its efforts on large taxpayers and international taxation.

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