China Individual Income Tax (IIT): Key challenges and considerations for foreign employees and employers

In early 2016, the tax bureaus in China have made the tax compliance requirements for foreign employees and employers stricter. In China, all income related to employment (whether in cash, kind or any form of economic benefits) is subject to tax, except the following fringe benefits to foreign employees:

Understanding China's Five-Year Tax Rule

The five-year tax rule is an important and misunderstood factor in determining a tax strategy for expatriates living in China. Foreign nationals who reside in China for more than five years can be considered Chinese tax residents and therefore liable with tax authorities on their global income. In this article, we outline the main points of this rule and consider strategies for compliance.

China’s new individual income tax rates.


China’s legislature has approved an increase in the individual income tax free threshold to RMB 3500 for Chinese nationals and a new streamlined schedule of tax brackets, down from nine to seven. The new rates will come into effect from September 1st.

Foreigners will also be subject to the new rates; however, the tax free threshold for foreign workers will remain at RMB 4800.

The Worst Chief Rep Ever


Note: Since this article was published, new regulations have been released for representative offices that will come into force on March 1st 2011. If you operate an RO or are considering opening one, please contact S.J. Grand for an obligation free appraisal of whether this is the right choice for your investment.

A case study in China tax compliance issues for representative offices. 

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