IIT Due Date Fast Approaching for Expatriates Working in China

As the March 31 due date approaches for China’s individual tax payers earning over RMB120,000 annually to file their self-declarations, more and more expatriates who live and work in China – regardless of their distinct visa status, income sources and levels – are looking for a clear explanation as to their individual income tax (IIT) liabilities in this country.

On Monday, foreign employees and employers attended a Dezan Shira & Associates event on IIT in Shanghai in order to better understand China’s taxation policies on individuals. They listened to the firm’s tax associate Jacky Qi outline the entire IIT picture for expatriates living in China.

In his presentation, Qi introduced the definitions of resident and non-resident tax payers as well as their different IIT liabilities. While tax residents in China are subject to IIT payments on their global income, non tax residents’ tax liabilities vary with the duration of their stay in the country, nationalities, income sources, and positions. Expatriates at a senior management position may carry heavier IIT liabilities, depending on their nationalities and the types of contracts they sign.

Qi also listed a number of IIT-exempt allowance items that expatriates can receive from their companies, to help them better structure their employment contracts.

Qi’s presentation attracted much interest and led to an active Q&A session at the end of the event. Attendants are very concerned with questions like:

• How can I structure a reasonable employment and bonus contract in my best interest?
• Is my income from overseas institutions tax exempt?
• How do the Chinese tax authorities technically define a person as a senior manager?

China’s IIT regulations are complicated and something every expatriate in the country does not want to misunderstand. A complimentary pdf answering these questions can be found below.