Personal Income Tax Services in China
China implemented the revised Individual Income Tax Law in 2019, and the changes in the regulations have impacted businesses and individuals to varying degrees. However, companies must conduct their annual individual income tax remittance according to the new regulations. However, they may face penalties for non-compliance because they do not understand the tax calculations, applicability, and tax deductions of the new regulations.
3E Accounting provides you with the necessary China personal income tax services so that you can easily cope with a range of employee personal tax management needs.
The main services include:
1.Individual income tax filing
2.Individual income tax payment
3.Tax treatment of foreign employees
Which individuals are exempted from personal income tax?
The Individual Income Tax Law of the People’s Republic of China stipulates that tax obligations are differentiated between residents and non-residents based on two criteria: residence and length of residence. Residents refer to those who habitually reside in China due to household registration, family, economic interests, etc. While foreigners working in China may be residents or non-residents.
Their tax liability is determined by the specific circumstances of their residence and employment in China within a taxable year, and they are exempt from personal income tax in the following cases.
- The period of residence does not exceed 183 days.
When non-China-domiciled residents reside in China for 183 cumulative days or more in a tax year for less than six consecutive tax years, the income that originated from outside of China and was paid by units or individuals outside of China in that tax year is exempt from individual income tax to competent tax authorities for the record. The “six-year” count is reset if the foreign individual spends more than 30 consecutive days outside of China during any tax year.
- If the employee does not live in China and stays there for no more than 90 days in a tax year and if the part of his or her income that comes from China is paid by an overseas employer and not by the employer’s establishment or premises in China, he or she does not have to pay individual income tax for that portion.
What Types Of Employees Are Required To Make Annual Settlement And Payment Of Individual Income Tax?
- Employees who have a difference between the amounts of the monthly tax paid in advance and the annual tax settlement.
- Employees who have not submitted information on special additional deductions and eligible public welfare donation expenditures to their employers.
- Employees who have worked continuously for the enterprise for less than one year and are only partially entitled to the tax exemption threshold, including foreign employees who come to work in China in the middle of the year.
- Employees who earn labor, writing fees, and royalties through part-time work in addition to the salary paid by the enterprise where they work.
- Employees who change employers.
- Employees who plan to stay in China for less than 183 days, but actually stay for more than that.
- Foreign employees who renew their passports in the middle of the year and apply for the new passport number as their tax identification number.
- Employees who are assigned to an overseas project in the middle of the year and have no tax records in China after leaving the country.
- Those who have a major medical illness and pay part of their own medical expenses.
- Employees who are already entitled to a preferential annual personal income tax rate for their year-end bonus, but wish to combine their year-end bonus with their salary income.
Please contact us, and one of our tax experts will be happy to answer any questions you may have about our China personal income tax services and our China corporate tax compliance services.
