Annual Tax Return in China
Filing of the individual income tax return for Chinese and foreign individuals, including overseas income.
Ah, the annual tax return. Most employees in China have their income tax deducted each month from their salary by their employer. However, residents that must also file an annual reconciliation tax return on comprehensive income every year before the 30th of June.
The annual tax return in China can be a complicated process to understand for both foreign companies that have employees in China or individuals working in the country. Our local experts can help you to collect and calculate your annual tax return, including overseas income. We will guide to a compliant and stress-free annual tax return process.
What is the annual tax return in China?
The annual tax return 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.
Why use HROne for the annual tax return?
How Employer of Record in China works
The annual tax return is calculated every year between April 1st and June 30th, and it involves both Chinese employees and foreigners.
We help your employee with all the processes of collecting the documents requested by the tax bureau, translating the documents collected from outside China, guiding the individual to proceed the process online, and visiting the tax bureau with the individual if the offline claim is required.
Normally, for the employee that obtains only the domestic comprehensive income, we will declare through the government’s website. But there are other cases where we need to collect more information (for example, when the employee has an income overseas).
Our service in detail:
Update and explain new policies. Collection, integration, and calculation of employees’ declaration data. Provide employee name list to the client who needs to process annual settlement and payment of income tax. Provide guidance to calculate and proceed with the final annual settlement and payment of income tax.
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HR in China, made easy
Employment Outsouricing
Hire and pay employees in China without setting up a local company. We manage HR, employment, and payroll for you.
Payroll and Benefits
Outsource payroll and social benefits of your employees in China. Save time, and become compliant with Chinese laws.
Recruitment
Find and hire the best talents to grow your business in China. We take care of the employment contract if you don’t have a local entity in China.
Frequently Asked Questions
Payroll & mandatory benefits are included in our China Employer of Record and our PEO services.
In many countries, PEO and EOR are the same thing and can be interchanged. However in countries such as China and the USA, PEO and EOR refer to different services:
With Employer of Record (EOR), the service provider takes on the responsibility & liability of the employer since the client does not have a legal entity in the country of interest.
With Professional Employment Organization (PEO), the service provider manages hiring, employment and payroll, but does not take on the responsibility or liability of the employer since the client has a legal entity in the country of interest.
The 13th month bonus in China refers to a bonus equal to one month’s salary that is usually paid at the onset of Chinese New Year.
This 13th month bonus is not mandatory unless explicitly stated in the labor contract upon signing. A 13th month bonus depends on the company’s performance as well as the employee’s performance.
It is possible for employees to receive an even higher bonus (14th or even 15th month bonus) depending on these factors.
Employees in China are entitled to annual leave days based on their work experience.
After working for their employer for 1 year. Employees who have worked less than 10 years are entitled to 5 days paid annual leave.
Employees who have between 10 and 20 years of experience are entitled to 10 days paid annual leave.
Employees with over 20 years of experience are entitled to 15 days of paid annal leave.
Using an Employer of Record/PEO service is often regarded as the modern approach to expanding into China. As long as you do not need to invoice in China, this is a perfect solution for foreign SMEs that want to start their business here. With an employer of record, you can legally hire and manager your team in China, avoiding the time and money required to set up a company.
HROne, the Employer of Record, is legally responsible for your staff during their term of employment in China.
We can hire a local Chinese employee in as little as one day!
Your staff members can be employed and located anywhere in China. Their employment status will be recorded by the local bureau according to their location.
Not necessarily. Staff members can work remotely from home or another location. However, we offer office space rentals upon request.
Yes, our Employer of Record solution can be used to hire both local and foreign staff.
Individual income taxes In China are based on a progressive tax brackets rate:
| Bracket | Annual Taxable Income (RMB) | Tax Rate (%) | Quick Deduction |
| 1 | No more than 36,000 | 3 | 0 |
| 2 | Between 36,000 and 144,000 | 10 | 2,520 |
| 3 | Between 144,000 and 300,000 | 20 | 16,920 |
| 4 | Between 300,000 and 420,000 | 25 | 31,920 |
| 5 | Between 420,000 and 660,000 | 30 | 52,920 |
| 6 | Between 660,000 and 960,000 | 35 | 85,920 |
| 7 | More than 960,000 | 45 | 181,920 |
Social benefits in China are divided into two categories:
- Five mandatory social insurances – These include pension insurance, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance.
- Housing fund – The purpose of this is to allow employees to save money to buy a house in China.
