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Author Topic: Advice on tax for ESL teachers  (Read 7150 times)

computer_says_no

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Advice on tax for ESL teachers
« on: December 16, 2015, 02:37:15 AM »

Foreign teachers should pay attention to the issue of tax payment. See this recent advertisement for a job in Wuxi:

Quote
SCHOOL:
Our brand is English First most of the people know that English Training school. So everything is same like the equipments and the whole environment.

SALARY:
From 10000RMB - 13000RMB (including the apartment ,insurance, bonus)

HERE IS THE PAYMENT DETAIL:

CASH ONLY!! NO TAX!!!!!

7,000 RMB ~ 10,000 RMB (Basic Salary)
+ apartment fee 1,500 RMB + insurance fee 395 RMB + flight ticket fee monthly 750RMB + monthly bonus 750RMB = 10,395 RMB ~ 13,395 RMB / MONTH

At first, it seems great that no tax would be deducted from your salary, but it isn't. Tax avoidance and cash-only payment is a strategy of the employer to save them money, but it is ultimately negative for you. The reason is this: In order to legitimately remit your money, you need proof that you've paid tax on all earnings. When you go to the bank to wire out money you must have (1) proof of income from your employer for the amount you're wanting to remit and (2) proof from either your employer or the Tax Office that you've paid tax on this amount. If a foreigner shows up at the bank wanting to wire out money, particularly large amounts, but can't provide such proof when requested, the bank staff are trained to flag this as suspicious and could well freeze your account. This is not theory: it has happened recently. You want to avoid a situation where you've already made plans to leave Hefei or China and need to transfer your money out immediately but you are unaware of these requirements and have to scramble to sort it out.

Most teachers in Hefei and China are never provided with payslips. This means you'll need to obtain a chopped letter from your employer stating income earned over the period requested. They should also be willing to provide you with a chopped letter stating the total amount of tax you've paid. Both of these things should be straightforward for them to provide and should be accepted by most banks as adequate proof for the purpose of remittance.

However, it's often the case when requesting documents, or anything else requiring someone's time and effort, that your requests are rebuffed or obstructed and it's ridiculously convoluted to get a simple paper. Don't be surprised if you are initially fobbed off, told that records don't exist, or that they've never handled such requests before, or it can't be done. This is all guff. Quite often, the HR Dept. has to apply elsewhere to retrieve your records, and then they have to type up a letter blah, blah, which is all too much effort.

If you're having real difficulty getting such proof from your employer or you have reason to believe they haven't actually been paying tax from your salary, you can go to the tax office directly and request tax receipts. Usually, the tax office is located in the same district as your place of employment, i.e., Luyang tax office, Bao He tax office. Don't be surprised if you also encounter similar resistance at the tax office. If both your employer and the tax office won't give you what you need, contact the SAFEA or a lawyer.

Aside: Many people will suggest alternative methods of moving lesser amounts out of China, such as PayPal, Western Union, MoneyGram, AliPay etc, all of which are feasible and have limitations. You can also wire your money via the account of a Chinese friend or family (who you trust real well). Not ideal, obviously. Then there are other unorthodox methods which involve either breaking the law or putting your money at risk. Regardless of how much you're wanting to move, or even if you don't need to move any money at all, you should always have proof that you've earned your money legitimately in China and paid tax. In this way, you cannot be accused of impropriety in the future.

A strategy for foreign teachers

1. Don't have a cash-in-hand, no-paper-trail job as your primary full-time job. You always want some kind of electronic record of your
    salary payments.

2. Before you start a new job, confirm both in the contract and in word from your employer that they will deduct the correct tax from
    your salary and pay it to the tax office. If they don't intend deducting tax from your salary, then you must individually arrange to pay
    tax at the tax office each month, which would be a real pain, but at least you'd be sure a) it's getting paid, and the correct amount
    is getting paid, and b) you'd have running receipts for your payments.  

3. You will not receive payslips from your employer. Therefore, periodically obtain (say every six months or year) a chopped letter from
    your employer that states your income and tax paid. If you are having difficulties getting these in a timely manner, you can obtain
    bank statements showing your regular salary payments and tax receipts from the tax office. Your proofs must be chopped and must
    be equivalent to the the amount of money you're seeking to remit.

4. Do this well before you make any plans to leave Hefei or China, and even if you don't have an immediate need to transfer money
    out. Don't wait until you have an urgent need for these papers before you decide to get your affairs in order. If you go into a bank
    prepared with exactly what they need, it's a piece of cake remitting money.

5. If you are wanting to transfer out an amount in excess of what you can prove as salary income, e.g., from the sale of an asset,
    you need to have official proof of the money made on that sale as well as the tax paid, even if the burden of tax payment lies
    with the buyer.
« Last Edit: December 24, 2015, 01:32:15 AM by computer_says_no »
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Aussie Mike

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Re: Advice on tax for ESL teachers
« Reply #1 on: December 16, 2015, 07:46:00 AM »

Quite a few foreigners have had and are having untold issues regarding this currently.
When they visit the Tax department they are finding discrepencies between earnings and taxes paid. Their money is often frozen until tax is paid and income proven.

Be sure to get the employer to supply documentation regarding income and taxes befire you try to move your money to avoid these issues.
« Last Edit: December 16, 2015, 07:48:24 AM by Aussie Mike »
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