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Foreigners working in Guangzhou will be required declare the details of their personal income taxes starting next month.

 

The Guangzhou Local Taxation Bureau, working to cut down on tax evasion and beef up tax collection, this week implemented a system directing all enterprises employing foreigners to set up a file for each foreign worker, whether he or she works on a short-term or long-term basis.

 

The enterprises must note who the company, agency or an individual pays for the foreign worker's income taxes.

 

The move comes after an order by the State Administration of Taxation (SAT) earlier this year, which requires local tax departments nationwide to establish a personal information system for foreigners.

 

Every foreigner working in companies, social organizations or government departments should have a file, the SAT said.

 

"The practice is well under implementation, and the personal income tax management system is taking shape," Luo Guiquan, deputy director-general of the municipal local taxation bureau, told China Daily.

 

The official said the system aims to help the city monitor and administer the income taxes of foreigners who work in Guangzhou precisely, making it harder for foreigners to evade payments.

 

Many foreigners pay taxes in full and on time, but others are more reluctant or try to evade payments, he said.

 

In a recent special campaign checking foreigners' personal income taxes among the foreign-funded enterprises and firms with foreign employees in Guangzhou, the city's local taxation authorities collected personal income taxes that should have been levied, late fees and fines of over 36 million yuan (US$4.5 million) in 2005.

 

"Guangzhou's economy is foreign-oriented and Guangzhou has over 1,600 foreign-funded enterprises," he said.

 

"The personal income taxes of foreigners who work in Guangzhou should have made a good contribution to the city's taxation."

 

Citing his recent studies, Ma Shizhao, an analyst with the Guangdong Provincial Local Taxation Research Society, said only about 30 percent of foreigners working in Guangzhou (excluding those from Hong Kong and Macao) have declared their income taxes.

 

And the problems of insufficient declaration or no declaration of personal income tax are still serious in Guangzhou.

 

Citing the case in Guangzhou Development District, where many foreign-funded enterprises are located, Ma said about 45 percent of foreign employees declared their monthly income below 20,000 yuan (US$2,500).

 

Most of them are middle-ranking managerial staff members and their monthly income should be over 20,000 yuan, Ma said.

 

(China Daily May 30, 2006)