When do I start paying income tax in China?
You’re working in China, but do you need to pay tax to the Chinese government? Below is a guide to who needs to pay tax – and when.
- Expats working for foreign-invested companies in China are liable to pay Individual Income Tax (IIT) from the day they arrive in the country.
- If your income comes from work done outside China, or your are paid by an overseas employer for work done in China, your tax liability depends on how long you have spent in China.
- Individuals who spend less than 90 days (or 183 days for residents of countries that have signed a double taxation treaty with China) in one calendar year in China are exempt from IIT if the employment income is paid by an overseas entity.
- Individuals who stay in China for more than 90 days (or 183 days for residents of countries that have signed a double taxation treaty with China), but less than a year, are subject to personal income tax on their employment income derived from work performed in China – regardless of which entity is paying.
- Individuals who reside in China for more than one year, but less than five years, are subject to personal income tax on both China-sourced and foreign-sourced income borne by a China-based entity.
- Foreign individuals who reside in China for more than five years are taxed on their worldwide income.
- After an individual resides in China for five years, in the sixth year, if the individual resides in China for less than a year, the five year period is reset and the “90-day (or 183-day) rule” applies again.
- The 90-day (or 183-day) foreign employment exemption rule does not apply if the employee in question holds a senior management position in China (examples include director, CEO, general manager, vice president and chief representative). These individuals are liable to individual income tax regardless of the numbers of days they reside in China during a calendar year.
Useful Chinese words and phrases
|个人所得税||gèr én suǒ dé shuì||Individual Income Tax|
|税前工资||shuì qián gōng zī||Income before tax|