Shenzhen Reopens GBA IIT Subsidy Applications for 2024

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) individual income tax (IIT) subsidy for foreign talents working in the region officially kickstarted in Shenzhen during May and June. The city accepted GBA IIT subsidy applications from May 15, 2024, to June 15, 2024. Now, Shenzhen has reopened the application period from September 10 to October 10.

UPDATE (September 11, 2024): On September 4, 2024, the Shenzhen Municipal Finance Bureau, Tax Bureau, and other departments jointly issued a notice. Based on current work requirements, Shenzhen has decided to accept supplementary declarations for GBA IIT subsidy for high-end and in-demand foreign talents for the years 2021, 2022, and 2023. The application period is from September 10, 2024, to October 10, 2024. Foreign nationals who missed the application in June are advised to apply promptly.

The Shenzhen Finance Bureau and three other departments recently released the Guidelines on the Application of IIT Subsidies by Overseas High-End and Urgently-Needed Talents for the 2023 Tax Year (hereinafter referred to as the “Shenzhen Guidelines”), which kickstarted the application of the GBA IIT subsidy this year.

According to the Shenzhen Guidelines, the city will begin accepting individual applications starting from May 15, 2024. The deadline for both individual applications and applications through employers is June 15, 2024.

Eligible taxpayers should submit their applications and supporting documentation through the designated system before the deadline.

In this article, we introduce the eligibility criteria, the calculation, and the application procedures for applying for the GBA IIT subsidy in Shenzhen.

Who can apply for the GBA IIT subsidy in Shenzhen?

To be eligible for the GBA IIT subsidy application in Shenzhen, individual taxpayers must fulfill all the conditions related to their identity, employment, qualifications, tax payment, and ethical integrity. There are also eligibility requirements for their employer.

Identity

The individual taxpayers should meet one of the following identity conditions:

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• The individual taxpayer is a permanent resident of Hong Kong, Taiwan, or Macao;
• The individual taxpayer is a Hong Kong resident who are eligible for the Hong Kong Immigration Scheme (gifted, professionals, and entrepreneurs);
• The individual taxpayer is a foreign national;
• The individual taxpayer is a returning overseas student with long-term foreign residency rights; or
• The individual taxpayer is overseas Chinese.

The validity of the above identity documents should extend throughout the tax year.

Employment conditions

The individual taxpayer must work in Shenzhen and meet one of the following conditions:

• Signed a labor (employment) contract with an employer in Shenzhen;
• Dispatched by a foreign employer, with a dispatch contract signed between the foreign employer and the receiving unit in Shenzhen; or
• Provides independent personal services and has a service contract with a Shenzhen tax-paying entity.

Meanwhile, the individual taxpayer should have paid individual income tax in accordance with Shenzhen regulations, accumulating at least 90 days (excluding 90 days) within the tax year.

Qualifications

The individual taxpayer should meet the standards set for in-demand talent or high-end talent.

High-end talents refer to those who satisfy one of the following conditions and are engaged in certain fields or industries:

• Inclusion in major talent projects at the national, provincial, or municipal level.
• Recognition as Overseas High-Level Talent by the national, provincial, or municipal authorities.
• Holders of the “Youyue (优粤)Talent Card” issued by Guangdong Province.
• Holders of the “Pengcheng Youcai (优才) Card” issued by Shenzhen.
• Holders of Class A foreigner’s work permit” (excluding those who obtained Class A permits based on the criterion of average income not being less than six times the previous year’s average social wage in Shenzhen).
• Holders of the “Confirmation Letter for Foreign High-End Talents,” “Confirmation Letter for High-Level Talent from Overseas, Hong Kong, or Macao” issued by Guangdong Province.

Relevant fields or industries include:

*There are more detailed explanations about the scope of relevant fields and industries in the Shenzhen Guideline.

In-demand talent refers to overseas scientific research talents, technical skills backbone, and senior management talents working in fields in the field of science and technology innovation, key development industries, or philosophy and social sciences in Shenzhen. The fields and industries scopes are the same as that for high-end talents.

Tax payment

The individual taxpayer should satisfy the following conditions regarding tax payment:

• Individual taxpayers should have paid taxes in Shenzhen according to law. Specifically, the tax amount paid in Shenzhen should exceed the “estimated tax amount.” This estimated amount corresponds to the tax payable on the applicant’s personal income in Shenzhen, calculated in accordance with the Hong Kong Tax Law. By using Hong Kong as a benchmark, it aims to ensure that the tax environment in the nine mainland cities of the GBA remains competitively equal to that offered in Hong Kong.
  
• The individual taxpayer needs to authorize the authority in charge to inquire about tax information from the tax department.

Ethical integrity requirements

The individual taxpayer must abide by laws and regulations, research ethics, and research integrity. Until the date of acceptance by the accepting authority, none of the following circumstances shall occur:

• In the past five years, the individual taxpayer must not have any records of major tax violations, false reporting, fraudulent claims, fraud, misappropriation of financial funds, or any dishonest acts such as violating scientific research ethics and integrity. Additionally, the individual taxpayer must not be directly or primarily responsible for such acts committed by their employer.
• The individual taxpayer must not have been criminally punished for crimes in China, nor be under judicial investigation for suspected crimes without a clear conclusion.
• The individual taxpayer must not be listed as a person subject to enforcement for dishonesty or bear direct or primary responsibility for their employer being listed as a subject of serious dishonesty.

Eligibility of the employer

The employer must be an enterprise or institution legally registered in Shenzhen.

Until the date of acceptance by the accepting authority, the employer shall not have any of the following circumstances:

• There are records of major tax violations in the past five years.
• The employer is included in the catalogue of enterprises with irregular operations.
• After inquiring about the Shenzhen public credit platform, the employer has been listed as the subject of serious dishonesty.

Meanwhile, the employer should have relevant qualifications, such as the HNTE certificate, to demonstrate they are engaged in qualified fields or industries and relevant qualifications should be valid for the year of application, i.e., 2023.

How much can eligible talent get in Shenzhen under the GBA IIT subsidy？

According to the Shenzhen Guidelines, the amount of the GBA IIT subsidy that an eligible individual taxpayer can apply for in Shenzhen is the amount of IIT already paid in Shenzhen minus the estimated tax amount:

GBA IIT SUBSIDY AMOUNT IN SHENZHEN = AMOUNT OF IIT ALREADY PAID – ESTIMATED TAX AMOUNT

The “amount of tax already paid” refers to the IIT already paid in Shenzhen in 2023 according to the IIT Law of the People’s Republic of China on the following types of income:

• Wages and salaries;
• Remuneration for labor services;
• Author’s remuneration;
• Royalties;
• Business income; and
• Subsidy income obtained from being selected for a talent program or project.

For those required to make annual IIT reconciliations according to tax law, the actual annual IIT paid should be based on the amount after settlement. For those not required to settle accounts and make final payments, the actual annual personal income tax paid should be based on the amount after adjustment.

“Estimated tax amount” refers to the tax amount that should be paid on the applicant’s individual income in Shenzhen according to Hong Kong tax law. For the 2023 tax year, the estimated tax amount is calculated using the standard tax rate method:

ESTIMATED TAX AMOUNT = APPLICANT’S TAXABLE INCOME × 15%.

The GBA IIT subsidy amount is capped at RMB 5 million (Approx. US$690,000).

How should the GBA IIT subsidy in Shenzhen be applied?

For individual taxpayers whose tax already paid in Shenzhen includes wages and salaries income, the GBA IIT subsidy application has to be made through the employer. Nevertheless, if the applicant only has income from personal services in Shenzhen, then they can apply for the subsidy directly without involving the employer.

Account registration

To initiate the application, the applicant and the employer must register as users on the Guangdong Province Unified Identity Authentication Platform, and individual applicants need to undergo real-name verification.

Individual application

From May 15, 2024, to June 15, 2024, the individual applicant should search for “Shenzhen High-end and Shortage Overseas Talent Individual Income Tax Subsidy” (深圳市境外高端人才和紧缺人才个人所得税财政补贴) on the Guangdong Government Service Network, submit the application for the GBA IIT subsidy, provide relevant proof materials, make a written commitment, and submit it for review by their work unit.

Employer review and submission

The employer must review the applicant’s information and materials, make a written statement and commitment, and submit the application in the designated system before June 15, 2024.

Preliminary review centralized review from the authority

The accepting authority will decide whether to accept or reject the application within 5 working days from the date of receipt. If the application materials are incomplete, the authority will notify the applicant or the applying entity to make corrections. The applicant must provide the corrected materials within 7 working days; if the corrections are not made within this period, the authority will not accept the application and will inform the applicant or the applying entity.

Following that, the accepting authority will conduct a preliminary review and then a centralized review to form a list of high-end talents and in-demand talents who can enjoy the GBA IIT subsidy policy.

Confirmation of annual tax data

After preliminary review and centralized review, the accepting authority will notify the applicant to log in to the declaration system within 5 working days to obtain and confirm the annual tax data, and submit it to the accepting authority for subsidy calculation.

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The applicant can log in to the official e-tax website in advance, go to the “Special Applications” – “Talent Subsidy (Reward) IIT Data” query page, query the tax data by year, and authorize it to be sent to the accepting authority.

If the applicant has any disputes regarding the taxable income amount or the amount of tax paid, they can contact the local tax department for confirmation. If the applicant has any disputes regarding the estimated subsidy amount, they can contact the local human resources department for confirmation.

Subsidy distribution

After the final determination of the distribution list and subsidy amount, the accepting authority will directly transfer the funds to the applicant’s designated financial social security card account or other personal bank account through the centralized payment system of the fiscal treasury.

GBA IIT subsidy extended to 2027

On August 25, 2023, the Ministry of Finance (MOF) issued the Circular on Continuing the Preferential Individual Income Tax Policies in the Guangdong-Hong Kong-Macao Greater Bay Area, specifying that the relevant policies will remain in force until December 31, 2027. Originally, the GBA IIT subsidy was set to expire by the end of 2023.

Talent availability has been one of the top concerns that foreign companies continue to cite as a hindrance to their business operations in China. According to the recently released  European Business in China: Business Confidence Survey 2024, over half of respondents from South China reported difficulties in attracting and retaining international talent and companies have identified policies for talent attraction as crucial to tackling this problem.

Amid the Chinese government’s ramping-up efforts to rebuild confidence and attract foreign investment, the continuation of the GBA IIT subsidy offers more certainty to foreign businesses and talents in China. It’s also demonstrated how foreign investment and talents are being emphasized by the government.

We will continue to monitor the release of further guidelines and application guidelines from Guangzhou and the other eight GBA cities.

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