High-Tax Country Resident Planning To Stay Put: China

If you are resident and domiciled in China (which will be the normal situation for a native-born Chinese individual) then you are taxable on your world-wide income.

There is a monthly personal allowance of RMB4,800; after that, most income is taxed at progressive rates from 5% to 45%, which applies to monthly income in excess of RMB100,000.

Employed individuals pay social security taxes of about 8%; the employer pays about 20%. Contributions to private pension plans, often termed 'enterprise annuities', and mostly free of tax.

There is no wealth tax, but the authorities are considering the introduction of an inheritance tax at high rates.

NB: The Chinese tax rules are considerably more complicated than the above simplified summary, and professional advice on the situation of any particular individual is a necessity.

China's new Enterprise Income Tax law has introduced a set of modern anti-avoidance paraphernalia, including CFC rules, a GAAR, transfer pricing etc. But the individual sector remains mostly free of such rules, and Chinese residents have felt free to accumulate overseas corporate and trust assets; it remains to be seen for how long these freedoms will remain in place.

For an individual wishing to explore the investment opportunities further afield, www.lowtax.net contains details of the investment and tax regimes for 50 offshore jurisdictions.

NB: The suggestions given above do not constitute investment advice. They are intended only to assist individuals in finding appropriate professional advice, which is essential for anyone planning offshore investment.