Guidelines on taxing overseas work, bonuses and expat deductions
Print Edition
NAVIGATING China’s individual income tax system? This guide breaks it down. It covers how bonuses, international work periods, expert exemptions and expatriate resident deductions are taxed under the system. Get clear on filing returns, claiming credits and understanding special deductions — all in one concise read!
Q: How is tax calculated for a non-resident individual who receives a month’s worth of bonuses in one month?
A non-resident individual receiving monthly bonuses calculates income for that month separately from other salaries and wages. The tax is apportioned over six months without deductions, using the monthly tax rate table. This method can be applied only once per non-resident individual in a calendar year. The formula for calculating the taxable bonus amount for the current month is as follows: [(Bonus income for several months/6)*Applicable tax rate-quick deductions]*6. The new regulations, which took effect on January 1, 2019, allow non-resident individuals who earned income after that date and have overpaid taxes as per previous regulations to apply for a tax refund.
Q: How should foreigners define the period of work inside and outside China for calculating their individual income tax?
The period of work in China is calculated on the number of days an individual works, including the actual number of working days he was in China and the number of days of sabbatical leave, personal leave and training received in China or abroad during the period of work. If an individual holds a post in both a domestic and a foreign organization, or if he holds a post in a foreign organization only, the number of days of work in China is calculated as half a day if the day of his stay is less than 24 hours.
Q: Under what circumstances are the wages and salaries received by foreign experts exempted from individual income tax?
All foreign experts who meet one of the following conditions are exempted from individual income tax on the wages and salaries they receive:
1. Foreign experts directly assigned to work in China by the World Bank under its special loan agreement;
2. Experts directly assigned to work in China by the United Nations;
3. Experts sent to China to work on United Nations assistance projects;
4. Experts sent to China by donor countries to work exclusively for non-reimbursable assistance projects;
5. Experts in culture and education who come to China to work for less than two years under the cultural exchange programs signed by the two governments and whose wages and salaries are borne by that country;
6. Cultural and educational experts who come to China to work for less than two years under exchange programs of Chinese universities and colleges, and whose wages and salaries are paid by the country;
7. Experts who come to work in China through private scientific research agreements and whose wages and salaries are paid by the government agencies of that country.
Q: How can foreign taxpayers determine their tax location when working in many locations here?
Temporary arrivals who work or provide labor services in multiple locations must adhere to the deadlines for filing tax returns specified in the tax law, and they are required to file their tax returns at the designated location once that deadline arrives. However, they are allowed to apply, and if approved, they may be required to file tax returns in a single location. Foreign taxpayers whose wages and salaries are paid by enterprises or offices in China are required to file tax returns with the local tax authorities.
Q: How should tax returns be filed during holidays?
If the last day of the tax payment period falls on a legal holiday, the day after the holiday ends is considered the last day of the period. If there are more than three consecutive legal days of holiday, the tax period will be extended proportionally.
Q: When should an individual file for the Foreign Income Tax Credit?
According to the provisions of the Individual Income Tax Law, an individual who receives income from abroad should make a declaration and apply for the credits within the period of March 1 to June 30 of the following year. This is because a resident individual may receive multiple incomes from abroad in a single tax year, and declaring the incomes all at once after receiving them not only increases the burden of the taxpayer’s declaration but also makes it difficult for the taxpayer to obtain the relevant tax records from authorities abroad.
Q: What happens if my tax refund application fails after filing the yearly reconciliation return?
You can learn about the reasons for tax refund failure by using the Individual Income Tax app, the Natural Person Electronic Tax Services website, the competent tax authority’s tax service hall, and other resources. You can reapply for a tax refund after updating the necessary details.
Q: What items are subject to individual income tax on directors’ and supervisors’ fees?
A) Director’s fee income earned by an individual as a result of holding a directorship is of the nature of income from remuneration for personal services and is subject to individual income tax under the item of income from remuneration for personal services. It only applies to a person who is a director or supervisor of a company but does not hold any office or employment there.
B) If an individual serves or is employed by a company and also serves as a director or supervisor, the director’s and supervisor’s fee will be combined with their salary income and shall be subject to individual income tax under wages and salaries.
Q: Is the special additional deduction applicable when hiring a domestic employee to be expatriated outside of China?
Domestic employees who are sent to work outside China and are Chinese tax residents can enjoy special additional deductions per regulations if they meet the conditions for special additional deductions.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
