Tax Avoidance Plan Using Overseas Income Deduction

The tax law stipulates that the income obtained by taxpayers from outside China is allowed to deduct the amount of personal income tax paid abroad in the amount of tax payable.

However, the deduction shall not go through the tax payable in accordance with the provisions of the tax law in China.

How to calculate the tax deductible accurately and effectively?

Please take a look at the following case: a Chinese taxpayer obtains taxable income in B country.

Among them: a company in B has earned 60000 yuan in salary and a right to use proprietary technology, and has earned 30000 yuan in salary at a time. The above two income has been paid 5200 yuan in B country.

The amount of tax payable is the deduction limit. The following are: the income of the 1. yuan: 5000-4000 yuan, 10% - 25 = 75 (yuan), the annual tax payable is 75 x 12 = 900 (yuan). The tax payable by the tax payer shall be deducted according to the expenses stipulated in the tax law of China.

Since the person has paid 5200 yuan in personal income tax in B country, it can be deducted from the deduction limit, and only 500 yuan (5700-5200) will be paid in China.

If the person has paid 5900 yuan personal income tax in B country, exceeding the limit of 200 yuan, there is no need to pay personal income tax in China. The excess of 200 yuan can be made up in the balance of the B country's reduction quota in the next five tax year.

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