Following our previous blog post regarding the tax obligations for a foreigner staying in China, let’s take a look at what preferential tax policies a foreigner in China may be entitled to.
1. 1300 RMB deduction in income tax
Subject to the relevant provisions of
Individual Income Tax Law of China
and
Implementing Regulations of Individual Income Tax Law of China
, foreigners who meet the specific requirements provided in the law and regulations are entitled to deduct 1300 RMB more compared with Chinese individuals when calculates their income tax.
2. Tax exemption for some income
Subject to the polices of the Ministry of Financial Department and the State Administration of Taxation, some income to foreigners will be exempted from individual income tax, including
a.subsidies for housing, meal and laundry obtained by a foreign individual in the form of non-cash or reimbursement upon receipts;
b.relocation allowance a foreign individual obtained in the form of complete reimbursement due to taking or leaving office in China;
c.subsidies of domestic and overseas business trips in line with reasonable standards obtained by a foreign individual;
d.family visit subsidies obtained by a foreign individual;
e.language training and children’s education subsidies obtained by a foreign individual;
f.income gained by a foreign individual from dividends and bonuses of enterprise with foreign investment.
3.
Tax exemption for foreign experts
The wage and salary incomes gained by foreign experts who meet one of the following conditions may be exempted from individual income tax:
a.foreign experts directly sent by the World Bank to work in China in accordance with a special loan agreement;
b.experts directly sent by one of the United Nations’ organizations to work in China;
c.experts coming to work in China for the UN aid projects;
d.experts sent by an aid-granting country to China to work specially for the project granted gratis by the country;
e.cultural and educational experts coming to China to work for two years on the cultural exchange project under an agreement signed between two governments, with their wages and salaries being borne by the country;
f.cultural and educational exerts coming to China to work for two years on the international exchange projects of China’s universities and colleges, with their wages and salaries being borne by the country concerned;
g.experts coming to work in China through a non-government scientific research agreement, with their wages and salaries being borne by the government organization of the country concerned.
These are the general provisions, whether a foreigner or foreigner expert is entitled to enjoy such tax preference or exemption depends from case to case. The true China income tax bill can only be determined by consultations with China legal and financial professionals.