The Impact of Changes in Expatriates’ Tax Residency Status in China on IIT Filing: Guidance for HR and Individuals

Employers in China are responsible for accurately calculating and withholding Individual Income Tax (IIT) on employment income. The calculation method for foreign employees depends significantly on their tax residency status.

For resident taxpayers, wages and salaries are subject to yearly computation, but employers must still compute and withhold IIT on a monthly basis. For non-resident taxpayers, the income from wages and salaries is calculated after deducting the standard deduction (RMB 5,000 per month, approximately US$710), and it is computed per month.

However, if a foreign employee’s residency status changes within the year, the IIT calculation must be adjusted accordingly. This adjustment can be particularly challenging due to the need to retroactively apply different tax rules and ensure compliance with both resident and non-resident tax regulations. Missteps in this process can lead to significant penalties and increased scrutiny from tax authorities.

In this webinar, Janice Dong, International Payroll & Tax Manager, will explain the concept of tax residency in China. She will cover IIT calculation methods for both tax residents and non-tax residents, and guide you through the process when residency status changes. The session will conclude with a live Q&A.

Key points:

• The definition of tax resident and non-tax resident
• IIT calculation method on salary income for tax resident and non-tax resident
• Actions to take when the tax residency is changed during the year

This webinar is FREE of charge.

For any questions or concerns, please contact Freda CHEN, at freda.chen@dezshira.com. We look forward to having you join us in this webinar, and answering any questions you might have on the subject.

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