China Individual Income Tax

APAC Taxation are experts in China Individual Income Tax (IIT). We provide income tax audits and returns for both residents and non-residents. IIT regulations are set by the  State Administration of Taxation (SAT) and the Ministry of Finance. The SAT is the body that is responsible for managing  the taxation policy. The individual income tax laws in China are complex so we strongly advise to find a taxation specialist. If you’re an expat/foreigner then we know the regulations inside out.

Resident or Non-resident?

There are two criteria that the STA uses to determine whether an individual is a tax resident or non-tax resident.  One of the criteria is to see whether the individual has domicile in China. The second criteria is to see whether the individual has resided in China for household, family or economic reasons for 183 days or more within a tax year.  A tax resident is liable to PRC IIT on his/her global income.

How are Domiciles and Non-Domiciles taxed?

There’s a few differences to how domiciles and non domiciles are taxed;

  • Domiciles are taxed on worldwide income whereas non-residents are taxed only on income from China.
  • There are nine tax categories in China. These are relevant for both residents and non-residents. The rates differ between domiciles and non domiciles, as well as reporting periods vary. The nine categories are;
    • Employment income
    • Remuneration for labour services
    • Author’s remuneration
    • Royalties
    • Business income
    • Interest, dividends, and profit distribution
    • Rental income
    • Income from transfer of property
    • Incidental income.
  • Domiciles pay annual tax on “comprehensive income”. Comprehensive income consists of employment income, remuneration for labour services, author’s remuneration, and royalties. Then they pay tax monthly on any business income, interest, dividends, profit distribution, rental income, income from transfer of property, or incidental income.
  • Non-domiciles only pay monthly tax, but they pay it on all nine categories separately. There’s no grouping and each category has their own rates.

When are tax returns due in China?

  • Monthly individual income tax returns are due by the 15th of the following month
  • Annual tax returns are due between March 1 and June 30. End of Financial Year is December 31.

How do I calculate my tax?

The burden is on the individual to calculate their IIT and file it with the SAT. The above explanation of how taxation works in China is merely an overview. In reality, the tax regulations are way more complex.

How we can help?

The individual taxation regulations in China are complex. APAC Taxation can make sure you’re compliant, as well as being able to apply the relevant exemptions that ease your tax burden. Our qualified tax professionals are experts in Chinese tax laws, and specialise in tax for foreigners and expats in China.

We also specialise in US Individual Tax Returns for US citizens based in China.

If you’re looking for a reliable, affordable, and expert tax specialist, then either call us today at APAC Taxation, or fill out our free quote form.

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