Working & Tax Law in China




As we may notice, there are more and more expats around us in China. Inevitably under certain conditions expats working in China will have to pay tax for their personal income. Here comes the question, what are the conditions? The article will give you a rough idea about it.


  1. Do you need to pay?


An individual who has no domicile in China and who has worked in China continuously or accumulatively for not more than 90 days in a tax year, or who has resided in China continuously or accumulatively for a period specified in the tax treaty, Wages and salaries paid by an employer outside China and not borne by the employer’s domestic institutions in China shall be exempt from individual income tax;


An individual who has resided in China for more than 90 consecutive or cumulative days in a tax year or 183 days under a tax treaty but less than one year, Personal income tax shall be paid on the income from the wages and salaries paid or borne by the enterprises in China and paid by the enterprises outside China during the period of working in China;


An individual who has no domicile in China but who has resided in the territory of China for not less than one year and not more than five years, whose income is derived from outside China, may, with the approval of the competent tax authority, only be provided by a company within the territory of China, Enterprises and other economic organizations or individuals shall pay part of the individual income tax; individuals who have resided for more than five years shall, from the sixth year, pay individual income tax on all income derived from outside China.


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2.What part of income you need to pay tax?


2.1 .Income from wages and salaries


It means that wages, salary, bonus, year-end bonus, labor bonus, allowance, subsidy and other income related to employment.


2.2Threshold


The amount of taxable income = income/month-4800 yuan.


2.3Exemption regulations for subsidies and allowances granted by foreign individuals



1Housing, food allowance, laundry fee:

Reasonable housing subsidies, food subsidies and laundry expenses obtained by non-cash or accountable of foreign individuals shall be exempted from individual income tax. The taxpayer should provide valid certificates to the competent tax authorities when first obtain aforesaid subsidies or number of subsidies or declare for income of wages and salaries at the next month of mode of payment change, tax exemption qualified only after being examined and approved by the competent tax authorities.



2Relocation fee


The relocation income obtained in form of accountable shall be exempted from personal income tax in case of foreigners working in China or demission. Valid certificates shall be provided by the taxpayer, the reasonable part of the tax certificate shall be exempted and approved by the tax authorities of china.



3Travel allowance


Domestic and foreign travel allowance obtained of reasonable standards shall be exempted from individual income tax. The transportation fee, lodging fee certificate (copy) or business plan shall be provided by taxpayer and confirmed by the competent tax authorities for tax exemption.



4Visiting fee


Individual income tax is exempted for the family visit fees obtained by foreign individuals. The taxpayer should provide transportation expenditure vouchers of visiting (photocopy), which shall be examined and approved by the competent tax authorities for tax exemption in respect of their reasonable parts. Moreover, foreigners have right to enjoy preferential treatment of tax exempt from personal income visiting fee with the limitation of vehicle travelling between the location of foreign individual is employed and his/her family seat (including spouses or parents’ residence) and a year of not more than two times.



5Language training fee and allowance for children’s education


Individual income tax shall be exempted for language training fees and allowance for children’s education received by foreign individuals. The taxpayer shall provide the vouchers and time limit documents for the acceptance of the above-mentioned education within the territory of China, and shall be examined and approved by the competent tax authorities for tax exemption in respect of their reasonable parts.


Please be aware, tax exemption is qualified only after being examined and approved by the competent tax authorities. Detailed regulations and procedures may vary in different areas, which will be upon further consultation with the local tax authorities.




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