China all benefits taxed from Jan 1 2022 update

[mathphyschap]

Hello all,

Me: currently teaching in a tier1/tier 2 international school in Beijing

There are ongoing discussions/rumours going around our school that from Jan 1 2022 all benefits, including tuition for children will become taxable benefits in China, i.e. Accommodation, Flights, Tuition, Medical Insurance etc. All these benefits would be ADDED to your salary (pushing you up the progressive tax table) and taxed at your marginal tax rate (likely to be 30-40% at a tier1 ish school)

This is some way away but could shake up the Chinese international school market quite a lot

i.e. Monthly Benefits:
Accommodation: 10 000 RMB / month
Flights: 24 000 yr/12 = 2000 / month
Tuition for one child: 200 000 yr / 12 = 16 700 / month
Food/Bills Allowance = 2000 / month

Total Monthly Benefits (currently tax free) = 30 700
IF taxed at marginal rate of 35% = 10 700 RMB / month extra tax (about USD 1600 / month extra tax)

Has anyone else heard anything about this? If it actually happens and if schools don't cover the costs then that's a big downgrading of a major employer on the international scene. I think some schools might have started to put things down in writing to staff?

Might also mean China comes off the list of possible countries for teachers with children (for better or worse)

[ILMathTeachr]

I don't know anything about Chinese taxes, but I see you using the term "marginal tax rate," however your estimated tax amount reflects a flat tax rate of 35%. So... I suspect you are misusing the term? Does China have a graduated tax rate? If so, then you'll want to find out what the tax brackets are.
Good luck.

[expatscot]

China did talk about doing this a couple of years ago, but were talked out of it by businesses (it would apply to all businesses paying fees to any school, and some - I think even Alibaba - use this as a perk.)

[mathphyschap]

Thanks - a good point

These are some Chinese income tax bands according to PWC
(https://taxsummaries.pwc.com/peoples-re ... nal-income )

Table I
Annual taxable income (CNY*) Tax rate (%)
0 to 36,000 0
Over 36,000 to 144,000 10
Over 144,000 to 300,000 20
Over 300,000 to 420,000 25
Over 420,000 to 660,000 30
Over 660,000 to 960,000 35
Over 960,000 45

My guess is that most international teachers at tier 1/tier 2 have an annual salary in the 420 000 to 660 000 RMB (tax rate 30%) and that IF the Chinese government considers all benefits (housing, meals, children's tuition etc) as 'extra income' then this may push them into the 660 000 to 960 000 bracket and the 'additional tax on the additional income' could be 35%.

I've had quite a few collogues say 'it's not extra income because no money moves', particularly for children's education but some of the rumors going around do seem to suggest that this is exactly how 'fringe benefits' are going to be treated from Jan 1 2022.

I think some of this is starting to be discussed in international schools around China and am curious to hear about what others are hearing (or even seeing in writing..) ?

[mathphyschap]

Thanks @expatscot

That would be grand if they have been talked out of this - pay and conditions in China are pretty favorable at the moment, especially for teachers with children in education.

I do though know of at least one tier 1/tier 2 international school that emailed it's teachers last week to say these changes are coming ...

Has anyone else heard anything?

[Banter1584]

There were already rumblings about this from our HR department in my previous school in China back in late 2018, and signalled the end of my tenure at the school and China as a whole. The golden years of low cost living and comparably high salaries are long gone and in some tier one cities the cost of living is comparable to hong kong.

With all the hassle, red tape, pollution and increasing nationalistic nature of the country , China just is not worth the hassle anymore.

[kellysensei]

Seems like there's a lot of hassle no matter where you go, if you have kids like me. :(

The fact is that China still has more jobs than most countries, at least in my field, so I'm keeping it on my list (at least certain cities).

[PsyGuy]

This has been talked about for a while and keeps popping up but addressing your issues. China pays pretty well, but what are the viable options:
1) Getting 70% of some benefit (such as a housing allowance) is still better than getting 100% out of NO benefit that youre going to find in DE such as US/UK/AUS/CAN.
2) Getting a third less in OSH benefits is still better than a third less in overall coin because again China pays pretty well.
3) China is a major employer, the rest of IE cant absorb that number of ITs if there is an exodus from China.

[expatscot]

Yes, we got that announcement too.

One way around the housing allowance is for the school to actually own the apartments. Then it's not a taxable benefit (at least, this was the case when the plans were announced a couple of years ago) because there's no cash being paid. I know some schools were looking into whether this would be a possibility.

With health insurance - health insurance in China is actually relatively pricey (I'm around 2000RMB per month.) So the tax impact of this could be quite significant.


I can't see that there'd be a way around fees - at least, until the influential parents realise that their kids' favourite teachers are leaving because they can't afford the tax on the school fees, and kick up with the authorities. Also, there is already a discrepancy between staff who have kids and those who don't - this will make it worse, because if the school has to work out how to increase salaries to cover this they will have to think about the effect it will have on others.


One other thought - staff kids are notionally charged fees because they take up a place which could otherwise be given to a fee paying student. What if the school then groups staff kids as 'supernumary' and doesn't count them in the official numbers? So, for example, if there were 100 students in Y7, and two staff arrived making 102 students, could the official number still be 100?

[mathphyschap]

Thanks Psyguy and Expatscot

@Psyguy - agree 70% of a benefit still better than no-benefit at all, so China maystill trump moving back to the UK even if terms and conditions were clipped by 20%. Also agree China is a big employer and changes in China might ripple out across IE if lots of teachers stream out . Could be that the pendulum swings more towards working in other Asian countries for those teachers (with kids) that are successful in moving on.

@Expatscot - seems like a lot of international schools are making announcements now - along the lines of 'Tax changes are coming, your benefits will be protected for another year or two, after that...' . For teachers with kids it's a challenge either way - if the school doesn't cover it then that's upto a 35% tax on each child's tuition, if the school's decide to cover it then that's a big disincentive not to higher teachers with kids. Not sure about trying to hide teachers kids amongst the crowd, I think the Chinese authorities are 'on the ball' (to quote an Ant and Dec song from some time ago)..

What I find interesting is that a lot of my colleagues - including ones with two kids - are still thinking it's not going to impact them. It's a big change..

[kellysensei]

Is the trend in China to allow just one child dependent per teacher? Many, if not most, of the schools I'm looking up (because they've posted jobs in my field) state on their website that they will only waive tuition for one child. I had an interview with a TIer 1 school in China this week, and it went great, but I was told the next day that they couldn't pursue me due to my family size (two kids and a trailing spouse). Frustrating...Just wondering if I have to take China off the table because almost no one seems to allow one teacher to bring two kids...?

[mysharona]

In the past Shanghai American School has professed to hired the best fit possible, regardless of the number of dependents. I"m not sure that policy remains given the current situation but we do have multiple teachers with multiple dependents.

[sciteach]

RE: Kellysensei

In general - teachers with 3 dependents (2 kids + partner) tend to be at the bottom of the totem poll when it comes to hiring. This is generally due to cost - which will be exacerbated due to COVID at present.

Depending on the school - I've found the following to be generally true from most employable to least employable

(1) Teaching couple
(2) Teaching single
(3) Teaching couple with kids
(4) Teaching single/couple with kids (only 1 works)

Even though there is a lot of doom and gloom about China (and I am one of those people thinking that), Tier 1 schools specifically in Shanghai and Beijing still get to choose from the best teachers out there. As such - competition is still fierce and there has never been a better time for a Tier 1 Chinese school to get local hires as they are less likely to move. Note that there has also been lots of problems with getting visas for dependents in China even to this day.

So should you give up on China if you set your heart on it? I don't think so - but reevaluating to one of the better schools in Tier 2'ish cities such as Suzhou, Guangzhou, Hangzhou, Shenzhen etc might be a good idea. Schools that have a majority Chinese student body sometimes will often hire a family with more kids to get more expat kids into the school. Do note that often these schools might use your kids often in advertising (even without you knowing it!)

Note that this is not just a China thing - I've seen this in other schools in asia!

[kellysensei]

For what it's worth, my husband has a TEFL certificate and plans to teach English wherever we end up. But I guess most schools might still consider him a dependent?

Well, it was just my first interview, and at least they liked me. I'll keep trying...our goal is somewhere in Asia; it certainly doesn't have to be China.

[expatscot]

An interesting thing will be to see how schools in other countries in Asia respond to this. There is the potential that they might end up being able to lure the best teachers away from China, so schools in China have to increase salaries to attract staff (and, consequently, increase fees.) With these communication is important so it would be good to see schools explaining why they have had to increase fees!