Foreigners working in China are to pay personal income tax only if they earn more than 4,800 yuan (US$592) a month, up from the previous threshold of 4,000 yuan (US$493), a Beijing newspaper reported on Wednesday.

The revised law on personal income tax came into effect on January 1 this year, tax calculations for foreigners have not been widely reported.

According to Chinese law, this new cutoff point is applicable to foreign staff in foreign-funded and foreign companies in China, and foreign experts working in enterprises, social organizations and government departments.

"A higher tax threshold means both Chinese and foreigners will have more money in their pockets," Peng Longyun, a senior economist with the Asian Development Bank's Resident Mission in China, said.
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"This is beneficial for China's consumption demand, on which the government pins high hopes to drive future economic growth," he said.

Since China initiated the reform and opening-up policies in the late 1970s, more and more foreigners have come here to work.

As at the end of last year, there were 65,000 foreigners residing in Beijing.

Officials with the State Administration of Taxation (SAT) said a majority of foreigners pay taxes in full and on time, but some still try to evade payments.

To beef up tax collection, the SAT requires local tax departments to establish a personal information system for foreigners.

Every foreigner should have a file, the SAT said.

It did not have a separate figure for personal income tax paid by foreigners, but foreign-related taxes including enterprise income tax and business tax reached 547.6 billion yuan (US$67.5 billion) for the first 10 months of last year, accounting for 19.1 percent of total tax revenues.

(China Daily February 9, 2006)