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China Revises Non-Resident Income Tax Regime

Offshore income earned by non-domiciled mainland residents will now be tax-free, according to a recently-issued State Council directive. More specifically, income earnt in China from overseas employers by non-domiciled individuals resident on the mainland for less than 90 days per tax year will not be subject to income tax.

Among the other headline changes announced in the directive were the following:

  • Offshore income earned by individuals not domiciled in China, but residing on the mainland for more than 183 days per year for less than six consecutive years, will be exempt from individual income tax providing all the relevant tax administration paperwork is completed. A single absence from the country of more than 30 consecutive days will suffice to trigger a further six years exemption period
  • Non-domiciled individuals residing in China for 90 days (or less) in any given tax year will pay no tax on income earned in China from an employer based overseas, provided that any such income is not paid via the employer’s China-based operation

These changes which came into effect on 1 January this year, are detailed in the Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China, which followed on from earlier revisions to the Law of the People’s Republic of China on Individual Income Tax by the Standing Committee of the National People’s Congress (as issued in August 2018).

For further details, please access the following links:

Decree of the State Council of the People's Republic of China No.707 (Regulations for the Implementation of the Individual Income Tax Law) (in Chinese)

Revised Individual Income Tax Law to Come into Force in January 2019

Content provided by Picture: HKTDC Research
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