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back to index backCHINAtalk December,  2004

Tax break for Americans at work on Mainland China

A new tax law recently signed by President George W. Bush could let U.S. citizens in Hong Kong working in mainland China pay fewer taxes, but expatriates could be forced to pay a fine of $10,000 if they fail to disclose foreign bank accounts and transactions.

The new law eliminates a 90 percent limit on the amount of tax credits American expatriates can claim against their U.S. taxes from those paid in their host nations. The United States is the only country that requires its citizens to pay both foreign and home country taxes.

In mainland China, the maximum tax rate is 45 percent for individuals earning more than 100,000 yuan per month. In contrast, U.S. citizens pay a maximum of 35 percent tax if they earn more than $311,951 annually. Moreover, Americans working abroad have a tax exemption of up to $80,000. "The new U.S. tax act is a positive development," says David Sutherland, chairman of the American Chamber of Commerce Tax Committee and a managing director at Morgan Stanley, who adds that the new tax rules are extremely complex. The new tax regulations also allow unused tax credits to be carried over for 10 years, up from the previous five years.

Source: Globality and South China Morning Post –

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Other articles from the same issue (December,  2004).

China's intensified efforts to enforce transfer pricing rules
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Acquisitions in China: A View of the Field
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Practical tips for protecting intellectual property in China
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Tax break for Americans at work on Mainland China
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Trends in Leadership: Overseas Chinese hired to lead local companies
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Relocating to China: Meeting the Challenges Head On
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