The Chinese PIT Application System is Updating By Ella Xu

Like we always tell our clients, China is changing fast everywhere.  Now, it is time for the government to throw a loop around the Personal Income Tax ( “PIT” in short) application more strictly.  Starting in 2002, the government started to develop the new systems for collecting PIT and implemented them in some pilot cities in the past years.  It came to Shenzhen in 2008 and started be used to for officials and employees in big companies. The definition of big companies is the company whose amount of PIT submitted on behalf of employees is over RMB100, 000 per year. It will spread to smaller companies and then finally cover all the companies in Shenzhen.
The new PIT application system is more complicated to use than before.  Especially for the first registration.  The more detailed personal information will also be reported clearly and truly.  If you are using a fake ID card, this system will identify it automatically.  And all the employees’ information should be submitted even he is a guard earning RMB1000/month and need not pay any tax, but his information should still be reported.  The employees should leave his home address for the tax office to mail you the tax invoice every month directly to you. It will be the condition and evidence to apply a loan from a bank to buy house, car or make investment, not like before, you may just print a piece of paper to show a fake number of your salary and the company will help you to make a seal on it.
For the foreigners, the whole name and passport number is not enough.  The number of Foreign Alien Employee Permit, Work Permit and VISA is also needed.  The residence of abroad and the record of exit-entry to China every month is also needed.  The tax rate will be different according to how long you stay in China.  The 183 days rule will apply seriously in the future.
All the money flows from Corp. Bank Account to Personal Bank Account should be reported.  No matter RMB50 to pay for diver’s fee or RMB100 to pay for fit-out guy.
The system covers the whole of China, except Hong Kong, Macao and Taiwan.  It is not connected with or reported abroad right now.