Since 1st of Jan, 2019, the new IIT of PRC has come into effect.

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WeChat Official Accounts:

Except the general rule applies to everyone, the following points are important for foreigners:

1. Who should pay IIT? What kind of income is taxable?

1) Foreigners who have lived in for accumulative 183 days or more in one tax year shall pay IIT on their income gained within or outside China. However, if this foreigner stays in China less than six consecutive years, even for each year accumulative 183 days or more, shall be exempted from IIT for his/her overseas income by filing with the competent tax authority. Moreover, if during these six consecutive years, he/she leaves China for more than 30 days once, the consecutive years will be restarted.

For example, if he/she leaves for more than 30 days in 2023, which is the fifth consecutive years for he/she lives in China, the consecutive years will restart in 2024.

2) Foreigners who have lived in for less than accumulative 183 days in one tax year shall only pay IIT on their income gained within China.

2. IIT exemption

In our previous blog: Individual Income Tax in China – How to Pay in 2019? we have listed what kind of income is taxable income.

However, the following income is exempted from IIT:

1) Awards for achievements in science, education, technology, culture, public health, sports and environmental protection granted by foreign or international organizations;
2) Insurance indemnities;
3) Basic pension.

3. Tax deduction or preferential treatment?

Before this new IIT, foreigners working in could enjoy housing, language training, children’s education subsidies etc., which are all tax-free. However, according to new IIT law, six items of expenses related to people’s livelihood could be deducted, such as children’s education, continuing education, housing rent etc. Then the question is: do foreigners have to follow the new or what?

According to a notice issued by General Taxation Administration, from 1st of Jan, 2019 till 31st of Dec, 2021 (transition period), foreigners could choose to enjoy the original rule on tax-free subsidies or choose to follow the new IIT for expenses deduction. But once he/she makes the choice, he/she has to stick to it in the whole tax year.

After the above-mentioned transition period, the original subsidies will not apply any more. Only expenses deduction listed in new IIT will apply.

Source: Sophie Mao from
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