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Blog [Infographic] China Individual Income Tax: What Expats Need to Know!

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[Infographic] China Individual Income Tax: What Expats Need to Know!

by Bobby Lee | 03 October 2018


New changes regarding China individual income tax regulations are now in place. More on what expats and business owners need to know about these changes (and how they can reduce their own taxable income) here.

People working and living in China, including foreigners, must pay individual income tax (IIT) on their earnings.

Under new residency rules, expatriates fall under new tax changes if their stay in China amounts to at least 183 days consecutively or accumulated during the period stipulated in the tax agreement. It is at this point that they are considered residents.

Expats will be required to account for their salaries during their stay whether they were employed by a foreign or domestic company.

Expats and domestic workers can expect changes to taxes for lower and mid-income brackets and new rules for foreign workers being taxed as residents.


China individual income tax brackets


The Bottom Line


Businesses should be aware of the scope of tax changes and the potential for closer regulatory scrutiny from authorities.

Businesses are advised to assess and implement changes to their payroll policy in compliance with these new regulations immediately.

Please be cognisant that although the official IIT laws are approved, there are still issues that require further clarification.

These include:

  • If preferential treatment for one-time annual bonuses are still valid
  • If foreign expats may still invoke tax-exempted benefits based upon reimbursement
  • The scope of the special extra deduction
  • If the 5-year rule for expats will be dissolved

Please contact Hongda for any IIT related inquiries and changes to payroll policies to ensure your business can adjust accordingly.

Topics: China Accounting & Tax

Bobby Lee

Bobby Lee

Helping make China companies easy since 2007 as a Senior Consultant