01
Tax residency and the 183 day rule
A resident is considered to be an individual with a domicile in China, as well as a person without a domicile who has been in China for at least 183 days in a calendar year. A non-domicile non-resident staying less than 183 days is generally taxed only with respect to Chinese source income.
- Tax year
- From January 1 to December 31
- Main threshold
- 183 days total stay per year
- How is a day counted?
- For a person without domicile, a day of stay of at least 24 hours is taken into account
- Why domicile is important
- It can lead to residency regardless of a simple count of days
Migration status, visa type and tax residency are different concepts. A separate calendar of actual presence is needed.
02
Income from China and abroad
A resident individual is in principle taxed on income from China and foreign sources. For a non-domicile person, there is a special six-year rule: foreign income paid by a foreign entity or person may be exempt until the conditions of six consecutive years are met. A one-time departure for more than 30 days affects the calculation of this period.
- Less than 183 days
- Generally Chinese tax on income from sources in China
- 183+ days
- Resident status in the relevant year
- Six consecutive years
- 183-day presence in each year and absence of a one-time departure for more than 30 days are checked
- Foreign tax
- Can be counted as a tax credit within specified rules
03
Income categories and rates
Wages, remuneration for personal services, royalties and royalties form the resident’s comprehensive income and are calculated cumulatively for the year. Entrepreneurial income and individual passive or property income are calculated according to their own rules.
- Comprehensive income
- Progressive rates 3–45%
- Business operation income
- Progressive rates 5–35%
- Interest and dividends
- Generally 20% unless special exemption applies
- Lease and alienation of assets
- As a rule, 20%, taking into account special rules for calculating the base
- Random income
- 20%
04
Basic and special deductions
When calculating a resident's annual comprehensive income, a basic deduction of RMB 60,000 is applied, as well as allowable social insurance and housing provident fund, special additional deductions and other amounts provided by law.
Early childhood care, children's education and continuing education - subject to conditions.
Allowable expenses for the treatment of serious diseases in accordance with the established procedure.
Interest on a home loan or rental housing, depending on the circumstances.
Elderly dependent support and other statutory deductions.
05
Employer, payroll and tax withholding
The Chinese employer usually acts as the withholding agent and withholds and remits IIT from wages on a monthly basis. For an international assignment, it is necessary to allocate working days, determine who bears the costs, and compare the Chinese payroll with foreign payments and tax equalization policies.
- Who is holding
- Employer or other designated tax agent
- Frequency
- Typically monthly withholding and prepayment
- Additionally
- Social insurance and housing fund depend on local regulations
- International employee
- Check split payroll, place of expenses, working days and treaty position
06
Annual tax reconciliation
A resident receiving comprehensive income calculates the final annual tax. The established annual reconciliation period is from March 1 to June 30 of the year following the tax year. The reconciliation determines the refund or additional payment after pre-withholding tax has been taken into account.
Review income, withholdings, and claimed deductions in your tax app or through your tax agent.
Reconcile Chinese and foreign income, deductions, tax credits and prepayments.
Submit an annual reconciliation, if required, and receive a refund or additional payment.
A non-domicile person leaving China before the start of the reconciliation period may complete the reconciliation before departure.
07
Foreign managers and owners
For an international executive, the tax position depends on the days of presence, where the work is performed, the source of payment, which company actually bears the expenses, and the applicable tax treaty. For the owner, dividends, sales of shares, foreign companies and accounts are additionally analyzed.
- Before arrival
- Build a presence calendar and determine the payroll model
- During the appointment
- Track 183 days, weekdays and one-time departures
- Foreign income
- Check the six-year rule, source and foreign tax credit
- Upon departure
- Close declaration obligations and save supporting documents
08
Documents for a personal tax card
- 01
Passport, visas and a complete calendar of entries and exits by day.
- 02
Employment and director agreements, secondment agreements and payroll registers.
- 03
Income from China and other countries: salaries, bonuses, dividends, interest, rent and sale of assets.
- 04
Confirmation of deductions, social contributions, housing fund and foreign taxes paid.
- 05
Tax residency certificates and applicable tax treaty analysis.