Question

Income earned by individuals in China from privately-owned businesses, sole proprietorship enterprises, or partnerships is generally subject to Income Tax at progressive rates from 5% to 35%, as follows:
Annual taxable income (Chinese Yen - CNY) Tax rate (%)
0 to 15,000 5
Over 15,000 to 30,000 10
Over 30,000 to 60,000 20
Over 60,000 to 100,000 30
Over 100,000 35

a) Create a Mathematical Model that represents the aforementioned information to calculate the annual income tax.
b) How much annual income tax you will have to pay if your monthly taxable income is CNY6,000.

Answer 1

a)Annual Income Tax -Mathematical Model

Annual Taxable Income(CNY)	Tax Rate	Annual Income Tax(CNY)
0 to 15,000	5%	15000*5% = 750
Over 15,000 to 30,000	10%	750 + (30,000-15,000)*10% =2,250
Over 30,000 to 60,000	20%	2,250+ (60,000-30,000)*20 = 8,250
Over 60,000 to 100,000	30%	8,250+(100,000-60,000)*30% = 20,250
Over 100,000	35%	20,250 + 35% of every CNY of above 100,000

b)Computation of Annual Income Tax

	Amount(CNY)
Annual taxable income CNY6000*12months	72,000
Annual Income Tax = CNY8250+ (CNY72,000-CNY60,000)*30%	11,850