How to calculate Personal Income Tax (PIT) in China – Part 1

Pro 1   |   April 20, 2020

​Although the personal income tax system in China may be difficult to understand, it doesn’t take a genius mathematician to work it out. Here are some simple steps for a better understanding:

Quick calculation guide based on annual income as below (Updated as of 2019 onwards):

E.g. My monthly salary is 20,000RMB, monthly taxable income amount would be 15,000RMB
20,000 – 5000 = 15,000 RMB

*Optional* If I have social insurance, the amount of social insurance contributed by the employee would also be deducted. “Monthly Taxable Income (RMB) – Social Insurance Employee Contribution” 

E.g. My monthly taxable income is 15,000 RMB, I am employed under a 12 months contract, My annual cumulative taxable income would be 180,000 RMB

15,000 x 12 = 180,000 RMB

E.g. According to the table above, my annual cumulative taxable income is 180,000 RMB, it would fall in the Grade 3 tax bracket with a tax rate of 20%, quick deduction amount of 16,920 RMB. My annual personal income tax would be 19,080 RMB.

180,000 x 0.2 (20%) – 16,920 = 19,080 RMB

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