Individual incomes tax for foreigners in China is one of the common concerns for expats. As stipulated by China’s Individual Income Tax Law, all individuals working and deriving income from within the territory of China are subject to individual income tax (hereinafter referred to as IIT). IIT is usually filed by employers’ human resource department or payroll teams on behalf of employees. And individuals are required to make annual declarations before the end of the financial year.
Main Factors for IIT Liability
To understand when foreigners working in China will be liable to pay IIT in China, it is important to know about several key factors. Whether IIT needs to be paid by an expat in China and how much IIT needs to be paid depends on:
How much the expat earns;
How long the expat stays in China;
Who bears the expats income;
Positions that the expat is holding in his host country and home country company.
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Taxable Incomes for foreign individuals
1. Living in China less than 90 days (183 days if there is a tax treaty in place)
Income sourced within China;
Income paid by overseas employer (not borne by its Chinese operation) is exempt.
2. Living in China more than 90 days (183 days if there is a tax treaty but less than one year)
Income sourced within China;
Income sourced outside China is not subject to IIT, unless the taxpayer is a director or senior manager of a Chinese domestic enterprise.
3. Living in China between one and five years
Income sourced within China;
Income sourced outside China paid by a Chinese enterprise or individual.
4. Living in China more than five years
Income sourced within and outside China from the sixth year onwards for every full year spent in China.
What are regarded as China-sourced incomes
(1) Income from providing services in China;
(2) Income from leasing property to a lessee for use in China;
(3) Income from transferring property located in China, such as buildings and land-use rights;
(4) Income from licensing the use of proprietary rights in China; and
(5) Interest, dividend, and bonus income derived from companies, enterprises, and other organizations or individuals in China.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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