I live in China; do I need to pay tax at home?
Most countries – the United States and Eritrea are notable exceptions – do not tax their citizens on income earned overseas. Read on to find out more.
The vast majority of countries tax their citizens only on income earned in the home country. This means that most expats earning income in China do not have to pay tax to their home country. If you’re living in China but still have sources of income in your home country, you may be liable to pay tax on that income. Consult your national tax authority to confirm your country’s policies.
The two major exceptions to this rule are the United States and Eritrea, both of which require their citizens to pay tax on income earned abroad.
Eritrea requires citizens to pay 2 percent tax on income earned overseas to the Eritrean government.
Americans are taxed on all income earned overseas.
American citizens should file a tax return with the United States government every year, regardless of their level of income, or whether they have earned anything at all while living abroad. Americans who have no tax debt to pay are not legally obliged to file a tax return, but doing so is an important preventative measure in case of a future tax dispute.
The IRS provides further information on tax liabilities for American citizens living abroad here.