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China Expats Service Centre of Tannet Group Limited is concerning the services for foreign investors living and working in China.
On the1st January 2019 the new tax law goes into effect and will affect most foreigners! That is curial for you . Please kindly reference following parts:
A. What are the new rules?
The most important impact comes from these 3 changes:
1. The government has the right to investigate foreigners via banks by tracking you via your transactions (ex. deposits, transfers or balances over RMB5000).
2. Banks automatically report any account with a balance over RMB5000 in the name of a foreigner to be investigated.
Investigations include:
Where does the money come from (salary etc)
→ If deposits come from salary
→ Is the foreigner on the right visa?
3. The minimum tax threshold changed from RMB4800 to RMB5000 per month
Your bank has the right to freeze your account while you are being investigated, they also have the authority to keep the money.
The banks will forward all information to the Chinese Government and Chinese Tax Office and link it with your visa.
Be vigilant, China will be commencing a Nationwide crackdown on ALL FOREIGNERS as of 31. December!
B. Who is affected?
All foreigners having a Chinese bank account (applies to any visa - workers, teachers, students,...)
Bank accounts having RMB5000+ will be automatically reported by the bank to the government.
Wechat / AliPay accounts with more than RMB5000.
C. Tips
*TIP 1: If you keep your bank account below RMB5000 there is no investigation.
*TIP 2: Wechat/ AliPay will be controlled as well (balance under RMB5000 will not be investigated).
*TIP 3: If you are a teacher make sure your school helps you fill out the form!
If you are on a legal Z visa or FEC permit you can fill the form as a "Resident Tax Payer" (more on that below).
If your school marks the "Resident Tax Payer" box it proves that
→ your school is actually paying tax from your salary; and
→ you have a legitimate work visa with FEC permit directly linked to your place of work, proving you are legitimate!
If your school tells you anything else you should definitely question your work permit!
*Tip 4: Be careful if working for a Training Centre that deposits directly into your bank account - many training centers are not legal, do not pay tax and are known to hire foreigners illegally → foreigners have been caught, investigated and deported for this.
D. Different bank treatment
From a seemingly reliable foreign source, we know how BOC, HuaXia and ICBC approach the customers - here a short summary.
1. Visit the branch where you opened the account.
2. Ask for a knowledgeable service person - not all are informed.
3. You need to fill out the tax form before transferring abroad (more on that below).
4. Don't expect the banks to inform you about the new law - Go and check by yourself.
5. Ask for a copy of the signed documents as they might not give it to you!
HuaXia Bank & ICBC are doing the tax registration automatically when registering an account - however, double check would be advisable.
BOC advises customers usually to do it online as it seems to be easier and less paperwork.
*There are different approaches and regulation when owning and operating a business. This must be checked with the respective lawyer and/or firm
**The RMB5000 threshold might change and vary - we keep you informed. Click & follow us
E. How to fill the Tax Form?
Everyone will need to fill out the Tax Form before transferring larger amounts of money abroad (>RMB5000) – We already have reports of people being asked to fill out the form (even though it's not officially enforced until January).
There are 3 choices to register oneself:
1. Chinese Resident - Living and working here, paying tax in China but in no other country.
2. Non-Chinese Resident - Living and working/ studying here but not really paying tax - check with the person who assists you in the visa and employment process.
3. Select this one when living and working in China, paying tax in China and also paying tax in other countries.
If not given by your employer you can find the tax form at your bank. To fill it out you need:
Copy of the work contract
Copy of certificate of employment
Copy of tax payment certificate
State if you pay taxes in another country as well.
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