Under the current tax system in China, there are different types of taxes that a single or a company pay. The individual income tax is one of the most important. And in the Chinese taxation system is also mentioned the annual tax return. Usually, most employees have their income tax deducted each month from their salary by their employer. But there are certain types of residents that must file an annual reconciliation tax return on comprehensive income.
In this article, we want to explain what are the different ways to file an individual tax return in China.
What is the Annual Tax Return?
This is the act of calculating the annual final individual income tax payable for the whole year after combining the income from wages and salaries, remuneration for labor services, author’s remuneration, and royalties obtained in a tax year.
From those, you then deduct the tax paid in advance in the tax year, calculate the refundable or supplementary tax payable, report to the tax authorities and make the tax settlement.
Should I apply for it?
In some situations you don’t have to apply for the annual tax return:
- For non-residents who have resided in China for less than 183 days, there is no need to declare;
- For residents, there are four situations for which you don’t need to declare:
- The total annual income from comprehensive income in the previous year does not exceed RMB 120,000;
- The amount of supplementary tax payable for the year does not exceed RMB 400;
- The advance payment of individual income tax in the previous year is consistent with the annual payment of individual income tax;
- Giving up the application for the tax return.
Except for the listed situations you should do the declaration in time.
When can I apply for it?
From April 1st to June 30th of the current year.
What are the consequences if I don’t declare on time?
If the taxpayer needs to pay tax (except in the case of exemption from remittance according to the provisions) and fails to handle the annual tax return according to the law, it may be subject to tax administrative punishment and shall be recorded in the personal tax credit file.
In accordance with article 62 of the law on the administration of tax collection, if a taxpayer fails to file tax returns and submit tax payment materials within the prescribed time limit, the tax authorities shall order to make corrections within a prescribed time limit and may impose a fine of not more than 2,000 yuan.
If the circumstances are serious, a fine of not less than 2,000 yuan but not more than 10,000 yuan may be imposed, and a late fee is imposed too.
Ways to file the annual tax return in China
There are three ways that you can use to apply for the annual tax return in China:
- Apply through your employer
- Apply through a third-party agency
- Apply on the “个人所得税” APP by yourself (PS. The app has only the Chinese version)
Continue to read below for more details about the three ways.
Apply through your employer
In this situation, there are two steps that the employee has to follow:
- Before April 30th, the employee submits an application to the employer and signs a confirmation letter to entrust the company to handle the individual income tax return.
- The employee should provide complete and accurate income information to the company, and the company will analyze the different situations of the employee and choose the best way to declare.
Normally, for the employee that obtains only the domestic comprehensive income, the company will declare through government’s website.
For the employee that obtain overseas comprehensive income, the company should go to the tax bureau and submit some documents to the counter such as the annual individual income tax return form (form B) (《个人所得税年度自行纳税申报表（B表）》) and individual income tax credit details (《境外所得个人所得税抵免明细表》) for overseas income, original passport and the letter of authorization with employee’s signature.
Note: the documents required are different for each district.
Apply through a third-party agency
In this situation, there are three steps that the employee has to follow:
- The employee searches for a third-party agency and signs a contract with the agency to entrust them to handle the individual income tax return
- After signing the contract, the employee login into the APP to manage the agency relationship with the effective operation date and contract number and other information including the name and tax number of the agent company. Then the agency can complete the process.
- The employee should provide complete and accurate income information to the agency, and the agency will analyze the different situations of the employee and choose the best way to declare
Normally, for the employee that obtains only the domestic comprehensive income, the agency will declare through government’s website.
For the employee that obtain overseas comprehensive income, the agency should go to the tax bureau and submit some documents to the counter such as the annual individual income tax return form (form B) (《个人所得税年度自行纳税申报表（B表）》) and individual income tax credit details (《境外所得个人所得税抵免明细表》) for overseas income, original passport and the letter of authorization with employee’s signature.
Note: the documents required are different for each district.
Apply on the “个人所得税” by yourself
Step 1 – Login and preparatory work
Download and open the【个人所得税】APP and make sure you have updated to the latest version.
P.S. Foreign individuals need to get the login code at the tax bureau counter. Be sure to register with the same name that you used to register your bank card.
After you receive the code from the tax bureau, open the app and click【个人中心】. Then click【登录/注册】on top to start the registration process.
Click【注册】and then【大厅注册码注册】.
Fill in the information required:
- Login code from the tax bureau【注册码】
- Select the document【证件类型】. Make sure to select passport 【外国护照】
- Enter your passport number 【证件号码】
- Enter your full name 【姓名】
- Enter your nationality 【国籍】
In the end, click on the button【下一步】.
In the last step, choose your password【密码】, input your phone number 【手机号码】. Click on the button 【获取验证码】 to receive the verification code by message on your phone. Then choose your address in the last field.
After you finish all the steps, you should see the message【注册成功】and after that you can log in with your phone number and password.
Step 2 – Bind bank card
In your personal profile, click 【银行卡】and then the blue button at the bottom to add a new card.
P.S. This card is used for tax return or payment.
Fill in the information of the bank card. The name is automatically filled in after the sign-up procedure. Then you have to fill in the required information:
- 【银行卡号】 – Number of the bank card
- 【所属银行】 – Name of the bank
- 【开户银行所在省份】 – Province where the bank is located
- 【银行预留手机号码】 – Phone number
Step 3 – Declaration Procedure
Click 【首页】-【常用业务模块】-【综合所得年度汇算】-【使用已申报数据填写】
(there are two ways to fill in the form. It is recommended to use the declared data or fill in the form by yourself.)
The app will ask to confirm the accumulated number of days in China in the previous year【境内累计居住天数】 and the years of continuous living in China【境内连续居住年数】.
Confirm the basic information and select 【任职受雇单位】-【下一步】
After entering the verification information page of income and pretax deduction data, please confirm:
- whether the wage and salary reporting data are completed, and whether there are other unreported incomes;
- whether the information of special additional deduction is correct. All the information of special additional deduction can be added or modified in 【专项附加扣除】(Foreigners who used living allowance in the previous year cannot use special additional deduction);
- if there are other deductions, such as an annuity, commercial health insurance, tax-deferred endowment insurance, etc., the operation shall be conducted in 【其他扣除项目】.
For example, if there is a labor remuneration income item, select【劳务报酬】-【新增】 to add.
For example, in the annual summary of annual one-time bonus, if you choose to combine the annual one-time bonus into the comprehensive income for tax purposes, or if there are multiple annual one-time bonuses, you can set it by 【奖金计税方式选择】.
After checking the information, enter the tax calculation interface. According to the data filled in before, the tax payable or tax refundable will be displayed at the bottom left. After confirmation, click 【提交申报】.
If you need to pay the tax, but the annual comprehensive income is not more than 120,000 yuan or the amount of tax is not more than 400 yuan, click 【享受免税申报】[enjoy tax exemption declaration], which means you do not need to pay the tax. Confirm to submit.
Tax return
If the declaration is successful, the refund will jump to the successful declaration — refund page, click 【申请退税】”apply for refund”. Select the bank card and click 【确定】”ok”.
Tax payment
If you need to pay tax, you can go to the tax page. Click 【立即缴税】”tax now” to pay.
Note: pay taxes by June 30th.
How HROne can be beneficial to you
The annual tax return in China can be a complicated process for foreigners, mainly because of the language barrier and regulations. We hope that with this guide, we were able to help you to understand more about it. In case you need help to file the annual tax return, feel free to contact us or fill in the form below.
