Online RMB120,000+ Income Declarations in Shanghai

March 11, 2014 Posted by China Briefing Reading Time: 5 minutes

By Adam Livermore, Dezan Shira & Associates

SHANGHAI – It is coming around to the time of the year again when people working in China and earning income over 120,000 RMB / year are required to make their personal declarations, which effectively forces them to take personal responsibility for the amount of tax withheld by the company on their behalf during the previous financial year.

Although this requirement has not been universally observed in the past, last year many companies were chased up by the tax bureaus to ensure all their employees had completed this procedure by the end of the month, under threat of further punishment for those that failed to file. This year is expected to be the same.

Since there are three weeks remaining until the filing deadline, now is a good time to provide an explanation of how your most senior – and therefore busy – employees can avoid the annual time-consuming manual process (filling out the form and delivering it to the bureau), and instead make the shift to an online filing process. The application only has to be done once – after that the individuals may make online filings every year. We are aware that many companies ask HR agents to help their employees make these manual filings and they are charged a significant fee to do so. Using the online method can eliminate these charges in the future.

Please note that the information below has been confirmed with the tax bureaus in the Jingan and Huangpu Districts of Shanghai, however there may be differences across other districts. We advise you to use this information as a guide rather than a gospel.

The online declaration process works by issuing a user name and a password to every employee registered as working at a company within a specific district of Shanghai. Therefore, if you are a company with a registered address in the Jing’an district of Shanghai, you should go to the tax bureau in Jing’an to make an application on behalf of the individuals in your company for issuance of these user names and passwords.

Once the individual has obtained this user name and password, he / she may login and complete the online declaration. As long as the individual does not have any supplemental income that was not declared by the end of FY2013, this process is very easy to complete (although foreigners may need assistance as the site is in Chinese). For those individuals that do have to pay some supplemental taxes, they will have to rely on the manual method of declaration for FY2013.

The key point for employers is to save the valuable time of their employees by organizing for user names and passwords to be provided to all of their employees in an efficient manner. Obviously, if you are working in a large company and there are dozens of employees earning over 120,000 RMB / month, it will not make sense to send them all to the tax bureau individually over the next few weeks to make this application for online filing. There is a more efficient way.

What the company should do is appoint one person (either an agent or a trusted employee) to collect the details of all the employees that may fall into this 120,000 RMB income bracket. The key details will be the name, ID type, ID number, address and mobile number of those individuals. That person should take a list of these details together with a Power of Attorney document to the tax bureau that is in charge of their company. Both the Power of Attorney document and the list should be stamped with the company chop. A copy of the ID card / passport of each employee should also be provided.

If there are only a handful of employees in the company that need to apply for the 120,000 RMB declaration, the tax bureau should issue the user names and passwords immediately. If there are more, the tax officer may require a day or two to complete the work of inputting into the system and obtaining the user names / passwords.

You should ensure that the person who is sent to the tax bureau to deliver the applications forms / collect the user names and passwords is either someone who is familiar with all the salary details of the individuals for which the applications are being made, or is an agent with no direct connection to the company. The reason is simple – with the user names and passwords , this person will potentially be able to access the details of the online tax accounts for all those individuals.

Once the user names and passwords have been distributed to the individuals, they may login to the government website and change their password themselves. Of course, they may also complete their declaration.

There is no specific deadline for making this application, nor is there a fee. The key point will be to ensure all the employees of your company have completed the declaration (whether online or via the manual method) by the end of March.

We hope this information may be useful to foreign invested companies in the Shanghai region this March.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam in addition to alliances in Indonesia, Malaysia, Philippines and Thailand as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email china@dezshira.com, visit www.dezshira.com, or download our brochure.

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