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How Will New Income Tax Rules Affect Expats?
Published on: 2018-10-25
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BT 201810 Legal 02China will likely retain its “five-year tax rule” for expatriates, according to the latest draft implementation guidelines of the country’s revised personal income tax code, which were published on Saturday for public comment.

030Under the draft guidelines, expats will need to pay Chinese taxes on their global income, including income earned outside of China, only if they have lived in the country for five consecutive years, which remains unchanged from the original tax code. If they leave the country at least once every five years for more than 30 consecutive days, only income they earn in China or which they are paid by China-based entities will be subject to local taxes.

BT 201810 Legal 05hina passed a revised personal income tax code in August, which will take effect starting 2019. China will shorten the length of residence used to separate resident taxpayers and nonresident taxpayers to 183 days, the same period used by countries such as the U.S. and the U.K., from the current 365 days.

BT 201810 Legal 06Example

An employee has monthly salary (after deducting social securities and housing fund) of RMB 20,000.
Your taxable income = salary before tax (gross) - non-taxable income.

1722221293Comprehensive income per month = RMB 20,000
Taxable income per month = RMB 20,000 – RMB 5,000 (statutory deduction) = RMB 15,000
IIT payable = RMB 15,000 *20% - RMB 1,410 = RMB 1,590

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