Individual Income Tax & Payroll

Services

In China, payroll management requires not only monthly salary calculations but also withholding of individual income tax, social insurance, housing fund, allowances for foreigners, and annual tax returns. For foreign employees, considerations must also be made regarding the number of days in China, salaries paid abroad, secondment contracts, and tax treaties.

Monthly Salary Calculation

We perform monthly salary calculations and reviews for both Chinese and foreign employees.

1. Salary calculations from gross pay to net pay
2. Calculations of salaries, bonuses, and various allowances
3. Withholding tax calculations for individual income tax
4. Calculations for social insurance and housing fund
5. Preparation of payroll ledgers and monthly reports
6. Adjustments during onboarding, offboarding, and salary changes

We can adjust the scope of services according to existing payroll systems and internal HR structures.

Individual Income Tax Filing

In principle, employers in China are responsible for withholding individual income tax on salary income. We support monthly tax calculations, preparation of filing data, and reconciliation with payroll records.

• Employee tax registration and information management
• Monthly individual income tax calculations
• Preparation and review of withholding tax filing data
• Tax processing for bonuses and various allowances
• Payroll records and tax return reconciliation
• Correction response for past declaration errors
• Response to inquiries from tax authorities

Taxation of foreign expatriates

For foreign expatriates, it is necessary to determine tax relations based not only on the payment location of salaries but also on the number of working days in China, the entity bearing the salary cost, and the actual working conditions.

• Tax Equalization and Hypothetical Tax Calculation
• Gross-up Calculations for Company-borne Individual Income Tax
• Reconciliation of China-paid and Overseas-paid Compensation
• Determination of tax residency in China​
• Confirmation of days stayed in China
• Tax treatment of salaries paid domestically and abroad
• Confirmation of secondment contracts and salary cost burden relations
• Application of tax treaties
• Tax analysis of bonuses and stock compensation
• Tax procedures upon entry and exit from China
• Consideration of double taxation and foreign tax credits

Annual tax return

Residents may be required to file an annual personal income tax return after the end of the tax year, depending on their income, withholding tax amounts, and deductions.

• Confirmation of annual salary and withholding records
• Determination of annual tax return obligations
• Calculation and declaration of annual tax amounts
• Confirmation of tax refunds or additional payments
• Consideration of foreign income and foreign tax credits
• Response to employees leaving China

We will address not only ongoing monthly operations but also specific issues related to personal income tax or foreign expatriates.

Why Mochizuki Consulting

Response to cross-border taxation

We will consider not only payroll calculations within China but also salaries paid abroad, secondment contracts, cost allocations between group companies, tax treaties, and taxation in the home country.

Multilingual communication

We coordinate with local HR and finance departments, foreign executives, and overseas headquarters in English, Chinese, and Japanese.

Integrated analysis of tax, payroll, and accounting

We comprehensively review the relationships between personal income tax, social insurance, corporate income tax, transfer pricing, and accounting treatment related to salaries.

Contact us

We provide integrated support for payroll calculations, personal income tax, and social insurance in China for foreign companies and foreign expatriates.