Income-tax threshold raised for foreigners
By Su Bei (China Daily)
Updated: 2006-02-09 05:30

Foreigners working in China have to pay personal income tax only if their monthly pay is above 4,800 yuan (US$592), up from the previous threshold of 4,000 yuan (US$493), Xinhua reported yesterday.

The revised law on personal income tax became effective as of January 1 this year, but the amount of foreigners' taxable income has not been widely reported.

The cutoff point for domestic residents is raised to 1,600 yuan (US$197), from 800 yuan (US$99) in most provinces and cities and from 1,200 yuan (US$148) in Beijing.

The tax threshold in Guangzhou and Shenzhen in South China's Guangdong Province remains the same as the local governments had set it at 1,600 yuan (US$197) earlier.

"A higher tax threshold means both Chinese and foreigners have more money in their pockets," said Peng Longyun, a senior economist with the Asian Development Bank's Resident Mission in China.

"This is beneficial for China's consumption demand, on which the government pins high hopes to drive future economic growth," he said.

Since China initiated the reform and opening-up policies in the late 1970s, more and more foreigners have come to work in the country.

The number of foreign people residing in Beijing alone stood at about 65,000 at the end of last year.

Officials with the State Administration of Taxation (SAT) said a majority of foreigners pay taxes in full and on time, but some still try to evade payments.

To beef up tax collection, the SAT requires local tax departments to establish a personal information system for foreigners.

Every foreigner working in companies, social organizations or government departments should have a file, the SAT said.

It did not have a separate figure for personal income tax paid by foreigners, but foreign-related taxes including enterprise income tax and business tax reached 547.6 billion yuan (US$67.5 billion) for the first 10 months of last year, accounting for 19.1 per cent of the total tax revenues.

(China Daily 02/09/2006 page1)