Tax Avoidance Planning With Additional Deduction Of Expenses

In general, the taxable income from wages and salaries shall be the monthly income less 800 yuan of expenses. However, some employees will enjoy additional deduction of 3200 yuan on the basis of deduction of 800 yuan from their monthly wages and salaries. The main scope includes: 　　 1. Foreign personnel who work in foreign-funded enterprises and foreign enterprises in China and receive wages and salaries; 　　 2. Foreign experts who have been recruited to work in enterprises, institutions, social organizations and state organs within the territory of China and have received wages and salaries; 　　 3. Individuals who are domiciled in the People's Republic of China but obtain income from wages and salaries by holding an office or employment outside the People's Republic of China; 　　 4. Other personnel who obtain wages and salaries as determined by the Ministry of Finance. 　　 For example, a taxpayer whose monthly salary is 10000 yuan is not subject to the provision of additional deduction of expenses. The calculation process of individual income tax payable is as follows: 　　 Taxable income=10000 － 800=9200 yuan 　　 Tax payable=9200 × 20% - 375=1465 yuan 　　 If the taxpayer is an American expert working in a foreign-invested enterprise in Tianjin (assumed to be a non resident taxpayer), and he/she earns a monthly salary of 10000 yuan, the calculation process of the individual income tax payable is as follows: 　　 Taxable income=10000 - (800+3200)=6000 yuan 　　 Tax payable=6000 × 20% - 375=825 yuan 　　 1465-825 ＝ 640 yuan 　　 The latter saves 640 yuan of tax than the former.