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Taxes on Foreign Workers in China

In China

Westerners are levied a surcharge for just about everything they purchase, from food to train tickets. This tax can range from 4 percent to 10 percent,

even up to 100 percent! In the past, some foreigners teaching in China were able to secure a discount card, which showed they were working in the country, but these aren't as common these days.

Taxes on the wages of foreign teachers vary in different areas, and it ranges from 5 to 45 percent above the base income of Y4,000. Some visiting scholars or exchange language teachers can be free of tax according to some agreements between governments, and some schools and universities will pay taxes for you.

U.S. Taxes

As an American working abroad, you will be exempt from U.S. income taxes as long as you make less than US$70,000 annually. You should still file a tax return with the Internal Revenue Service. Even though you may not owe any money, not filing can result in huge hassles years down the line when you have long forgotten your failure to file. The burden will be yours to prove to the IRS that you were actually overseas at the time and that you didn't make enough money to require any tax payment.

For complete information, the IRS publication "Tax Guide for U.S. Citizens Abroad," is available through the IRS and the various embassies. There is an IRS representative located year-round at the U.S. embassy in Tokyo, Japan, who is available for consultation:

IRS
U.S. Embassy, Tokyo
10-5, Asasaka 1-chome
Minato-ku (107)
Tokyo, Japan
(81) (3) 3224-5470
Fax: (81) (3) 3224-5274

To contact the IRS from the United States prior to your departure, dial (800) TAX-FORM to order tax forms or informational booklets or (800) TAX-1040 for assistance with preparing your taxes. To obtain a list of the regional U.S. tax offices, including numbers that can be dialed from overseas, request publication 910.

The following U.S. accounting firms with branches in China can also assist in preparing tax returns:

Arthur Anderson & Company
China World Trade Tower #1515-25
Beijing 100004, China
(010) 6505-3333
Fax: (010) 6505-1828

Coopers & Lybrand
Capital Mansion #2401
Beijing 100004, China
(010) 6466-4092
Fax: (010) 6466-4024

Deloitte& Touche/Thomatsu
China World Tower #517
Beijing 100004, China
(010) 6505-4604, (010) 6505-4605, or (010) 6505-4606
Fax: (010) 6505-4610

Ernst & Young
Hong Kong Macau Center
Office Building, 10th Floor
Beijing 100027, China
(010) 6501-1520 or (010) 6501-2288, ext. 1050

KMPG Peat Marwick, Huazhen
2609 Jing Guang Center
Beijing 100020, China
(010) 6501-3388, ext. 260-8188 or (010) 6591-3388
Fax: (010) 6500-4059

Price Waterhouse
China World Trade Center
East Wing 409
Beijing 100004, China
(010) 6505-1155
Fax: (010) 6505-5033