IIT Due Date Fast Approaching for Expatriates Working in China

March 23, 2011 Posted by China Briefing Reading Time: 3 minutes

Individual income tax due March 31

SHANGHAI, Mar. 23 – 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, a significant number of 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. Qi’s presentation answering these questions and more can be found here in complimentary pdf format. For more information, please contact us or check out our related reading below.

Dezan Shira & Associates Tax Associate Jacky Qi (left) and Business Development Associate Fabian Knopf (right) give a presentation on individual income tax in Shanghai earlier this week.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in China. The firm specializes in assisting foreign enterprises and individuals with their annual tax obligations. For advice, please email tax@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

In this issue of China Briefing we discuss expatriate individual income tax filings together with permissible tax deductions and allowances.

The China Tax Guide (2011, Fifth Edition)

A comprehensive overview of all the taxes foreign investors are likely to encounter when establishing or operating a business in China. (PDF priced at US$40)

China Expatriate Annual Income Tax Reporting for 2010 Tax Year

China to Raise Deductible Income Rate for IIT to RMB3,000

China Clarifies Verification Standards for IIT After Equity Transfers

The Importance of Chinese Fapiaos When Doing Your Accounts