Every country has its own tax breakdown. China’s tax breakdown is a little different from the rest of the world, but it is still interesting to see how it is broken down for the second largest economy in the world.
An individual’s income tax is dependent on their level of income, and it ranges from 5% to 45%. Individuals are also responsible for a 20% tax on the interest or gain on investment they receive. This 20% is actually different from some other major countries where your tax bracket includes your income and your earnings on investment. You often end up paying one specific percentage.
The standard tax rate for both domestic and foreign companies stands at 25%. However, smaller companies and the small business sector can pay a 20% tax, depending on their industry. Some of the high tech companies actually pay a lesser rate of 15%, but again, that is based on the industry the company falls under.
Income from a business is not taxed the same way as income from a salary. Personal business income is taxed between 5% and 35%, depending on both the industry of business and the profit generated from the business.
Real estate is taxed at a much lower rate of 20% after deducting the purchase cost from the sale price.
These are just some of the tax breakdowns. With the proper accountant and proper paperwork, you stand to pay a better rate on both your income and your profit. Either way, this is quite different from several other countries that put tax rates at the same or similar percentage, regardless of profit and salary. These are a few of the tax laws to keep in mind when operating or working in China. The savings potential can be great, as long as you have the right tools and proper knowledge.
