No Rise In Tax Threshold For Expats In China

The income tax threshold of 4800 Yuan (£461) for Expats in China will remain unchanged when personal tax thresholds are raised later this year

London, UK (Pryce Warner International) August 11th, 2011 – The current threshold is 2000 Yuan plus an additional 2800 Yuan for Expats.

Beginning September 1st, the Chinese government will raise the threshold to 3500 Yuan but the extra sum for Expats will be cut to 1300 Yuan, meaning they will effectively retain the same 4800 Yuan benefit.

After plans were announced to raise the thresholds, many Expats expressed their concerns as the cost of living is rising dramatically in China, particularly in the fast expanding major cities.

The move is an attempt by the Chinese government to provide support to lower and middle income families through tax benefits, and reduce the income gap between Expats and locals.

China currently levies tax progressively on personal salaries in nine brackets ranging from 5% to 45%. From September 1st, the 15% and 40% brackets will disappear and there will be a new 3% rate.

A local investment analyst commented that Expats earning in excess of 18 000 Yuan per month would most likely pay more tax, while Chinese citizens would need to be earning 38 600 Yuan per month to incur the higher rate of tax.

Expats have expressed concerns over this as they are subject to the same local costs and rates of inflation as Chinese citizens.

David Retikin, Director of Operations Pryce Warner International, a Financial Services Provider for Expats, commented: “It is highly unfair to reduce the Expat tax threshold at the same time the basic rate is increased. Expats are subject to the same costs as local citizens and should therefore be entitled to the same benefits. The cost of living has been rising sharply in Shanghai and Beijing recently, the main locales for Expats, and to keep the tax threshold rate the same effectively guarantees that Expats will be left out of pocket.”

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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