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Policy Express|What are the tax incentives for foreigners?

Time:2022-02-21 Browse:157

The introduction of foreign personnel can promote the prosperity and development of our country, considering that foreign personnel will have a great degree of integration and influence on our country, and at the same time affect the development and stability of our country to a certain extent. The government has also made specific regulations of income tax exemption for the foreign personal.


1. How to declare personal income tax


Under any of the following circumstances, the taxpayer shall deal with the tax declaration according to law:


1.If obtaining the comprehensive income, it is necessary to complete the settlement and payment of tax:


2.Obtaining the taxpable income but not having the witholding agent;


3. Obtaining taxable income, the withholding agent fails to withhold the tax;


4. Obtaining overseas income;


5. Cancelling the Chinese household registration due to immigration to overseas:


6. Non-resident individuals obtain wages and salaries from two or more places in China.


Taxpayers can use the personal income tax APP or the web terminal of the electronic tax bureau for natural persons to access online declaration, or to declare by mail, or directly to deal with the tax declaration at the tax service hall.


2. Tax exemptions for foreign personal allowances and subsidies


The following allowances and subsidies obtained by foreign individuals (including compatriots from Hong Kong, Macao and Taiwan) are temporarily exempt from personal income tax:


(1) Housing subsidy, meal subsidy, relocation fee, laundry fee obtained in the form of non-cash or actual reimbursement;


(2) Relocation fee obtained in the form of actual reimbursement due to employment or resignation in China, exclduing monthly or periodic payments by employers to expatriate employees in the name of relocation fees;


(3) Domestic and overseas business trip subsidies obtained according to reasonable standards:


(4) The family visit fee obtained, which is within the reasonable amount.The reasonable amount only refers to the transportation costs between the individual’s place of employment and the location of his/her family (including the place of residence of his/her spouse or parents) in our country and no more than twice a year:


(5) Subsidies for language training in China and children's education in China, which are within a reasonable amount


(6) Special circumstances in which foreigners living in Hong Kong and Macau for family reasons may enjoy six subsidies.


Since January 1, 2004, foreign individuals (excluding Hong Kong and Macau resident individuals) employed by domestic enterprises in China, who live in Hong Kong and Macau for family and other reasons and travel between the Mainland and Hong Kong and Macau every working day, and are thus granted by domestic enterprises (including their affiliated enterprises) subsidies in the form of housing, meals, laundry, relocation, etc. in Hong Kong or Macau in non-cash form or in the form of actual reimbursement, who can Provide valid proofs, confirmed by the competent tax authorities after examination, can be exempted from personal income tax. For the aforementioned subsidies obtained by foreign individuals for their language training and children's education in Hong Kong or Macau, if they can provide valid expenditure vouchers and other materials, the part that is confirmed to be reasonable by the competent taxation authorities after examination and confirmation, they are exempt from individual income tax.


During the period from January 1, 2019 to December 31, 2021, foreign individuals who qualify as resident individuals may elect to enjoy special additional deductions for personal income tax, as well as preferential tax exemptions for allowances such as housing subsidies, language training fees, and children's education fees, but may not enjoy them at the same time. Once an expatriate individual has made the election, he or she may not change it within one tax year. Starting from January 1, 2022, foreign individuals shall no longer enjoy the preferential policy of tax exemption for housing allowance, language training fee and children's education fee allowance, and shall enjoy special additional deduction in accordance with the regulations.


3. Payment of lump sums by foreign dispatched units


For foreign workers who come to China, the foreign dispatched unit will issue a lump sum payment, including:


Personal salaries, public expenses (post and telecommunication expenses, office expenses, advertising expenses, necessary communication expenses for business transactions), living allowance expenses (housing expenses, travel expenses), if the above income can be clearly divided, only the part of the income from wages and salaries can be used. Personal income tax is levied in accordance with regulations.


4. Dividend tax benefits

Dividends and bonus income obtained by foreign individuals (including Hong Kong, Macao and Taiwan compatriots) from foreign-invested enterprises are temporarily exempt from personal income tax.


5. Tax-exemption for foreign experts’ wages and salaries


Wages and salaries earned by foreign experts (including compatriots from Hong Kong, Macao and Taiwan) are exempt from personal income tax if they meet one of the following conditions:


(1) Foreign experts sent directly by the World Bank to work in China under special World Bank loan agreements;


(2) Experts directly dispatched by the United Nations to work in our country;


(3) Experts working in China for UN assisted projects


(4) Experts sent by donor countries to our country to work on the country's gratuitous aid projects:


(5) Cultural and educational experts who come to China to work for less than two years under the cultural exchange program signed by the two governments, whose salary and wages are borne by the country:


(6) Cultural and educational experts who come to China to work for less than two years under the international exchange program of China's universities and colleges, whose salary and wages are borne by the country:


(7) Experts who come to China to work through private research agreements,whose salaries and wages are borne by the government agencies of that country.


6. Income from stock transfer is exempt from tax


Since November 17, 2014, the income from transfer difference obtained by individual investors in the Hong Kong market investing in A shares listed on the Shanghai Stock Exchange is temporarily exempted from individual income tax; Since December 5, 2016, the income from transfer difference obtained by individual investors in the Hong Kong market investing in A shares listed on the Shenzhen Stock Exchange is temporarily exempted from individual income tax.


Since December 18, 2015, individual investors in the Hong Kong market are temporarily exempted from personal income tax on the income derived from the transfer difference between the shares of mainland funds bought and sold through mutual recognition of funds.


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