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News: Tax exemptions for foreigners in China
In order to further reduce the burden on taxpayers, the personal income tax policy on foreign individuals is hereby announced as follows:
Foreign individuals who meet the personal requirements of residents may choose to enjoy special additional deductions of individual income tax. You can also choose to follow the Notice of the State Administration of Taxation of the Ministry of Finance on Several Policy Issues of Individual Income Tax (Caishuizi (1994) No. 020), the Notice of the State Administration of Taxation on the Implementation of the Issue of the Subsidy Levy and Exemption of Individual Income Tax by Foreign Individuals (Guoshuifa (1997) No. 54) and the State Administration of Taxation of the Ministry of Finance on the acquisition of Hong Kong by Foreign individuals Notice on the taxation and exemption of Individual Income Tax for housing and other subsidies in Australia (Finance and Taxation [2004] No. 29) stipulates that tax exemption preferential policies for housing subsidies, language training fees, children’s education fees and other subsidies shall be enjoyed, but not at the same time. Once selected, the foreign individual cannot change it within one tax year.
This announcement shall be in effect until December 31, 2027.
General Administration of Taxation, Ministry of Finance
August 18, 2023
Q & A:
Q1: what are the tax exemption benefits for foreigners working in China?
A1: Foreign individual s working in China can enjoy the tax exempt benefits on the following categories:
Housing rental expense
- Education expense for children
- language training expense
- Meal fee
- Laundry fee
- Relocation expense
- Business travel expense
- Home leave expense
These benefits are known as perks not included in the salary and wages but paid on a reimbursement and non-cash basis.
Q2: Who will benefit from China’s extended tax policy on foreigner’s IIT fringe benefits?
A2: All foreign individuals working in China as well companies trying to retain foreign talents will benefit from the extended preferential tax policy.