jpg
Business China

Major Individual Income Tax Reforms in China for Foreigners In 2019

+86-020-2917 9715 proposal@set-up-company.com
Tax Reforms in China

In case you’ve forgotten, China introduced amendments in its Individual Income Tax(IIT) law, in 2018. The reforms were hailed as a landmark development in country’s otherwise strict taxation laws. There’s no doubt that over the years, China has transformed its corporate tax system to ease the burden on low-income communities.

The transformation also aims to achieve income equality by lifting the poor out of low-income and combat high living costs caused by income growth in urban regions.

The amendments came into effect on 1st January 2019 and affect both local and foreign taxpayers. After the introduction regulations, here are the key changes which were implemented.

Revised Tax Deductions


Previously held at CNY3500, the standard monthly deduction was increased to CNY5000, while varying marginal rates now apply to monthly wages and salaries. Foreign individuals who were paying an additional CNY1300 are no longer required to pay the deduction against monthly income.

Reclassification of Tax Categories


Prior to reforms, eleven categories of income were established, each with a different tax rate. However, now a new category “comprehensive income” is introduced that consolidates four categories i.e., wages and salaries, income from freelance and independent services, royalty income and author’s remuneration.

Tax China

New Tax Residence Rule


Non-domiciled individuals having worked in China for 183 days are now required to pay IIT taxes. Before the reforms, IIT was only levied on residents who have been in China for at least one year and domiciled individuals.

Tax rates differ for domiciled and non-domiciled residents, in addition to those who’ve worked in the country for over a year but less than five years and more than five years. The variation rates act as a compensation for individuals who are now required to pay individual taxes on their worldwide income. 

New Tax Filing Requirements


Revisions also apply to  annual and monthly prepaid filings as well as filing deadlines. Withholding agents are required to withhold comprehensive income tax on monthly bases; however, the IIT is calculated on annual basis. Taxpayers can apply for a rebate in case they overpaid to the withholding agent or makeup for the underpaid tax at the end of the year.

Additionally, the three lowest tax brackets have also been widened and readjusted, while tax authorities can make adjustments to tax rates in special circumstances.

Foreigners need to take proper action to cope with the reforms. With a unique tax code allotted to every individual, each taxpayer, especially foreigners, will be under more scrutiny and control. This is why it’s critical for you to have expert assistance which we can provide.

Get in touch with us here.
  • James Oliver "True professionals, very helpful and dedicated. Your support team is fantastic."
  • Robert Gatti "Our advisor was brilliant and we were given more help that we knew we needed. What I liked most about Business China's service was the prompt and businesslike approach.It helped us dramatically. At a...
  • Vivian Belfanti "Quality work and friendliness is why I chose to work with Business China. Business China is organized very easy to work with."
  • Tim Orchard "Thanks to Business China’s professional guiding and efficient processing about company incorporation and VAT refunding, our new entity in Guangzhou already step into a virtuous circle. I have to say...
  • Victor Declety "Business China allows us to focus on our customers instead of being tangled into enterprise level business incorporation and maintance."
  • Ben Hunter "Business China is helping people who don't necessarily know how to connect your current business with the booming Chinese market and how to lay out your 'China Dream' here specifically. It has been...
  • Daniel Wong "A great customer experience! The flexability and speed of response from the account manager, as well as the quality of the service process was exceptional."
  • Stacey Morris "Businesss China has been superb. Their customer service is great. The guys there respond very quickly and go above and beyond that help."
  • M. Salem Having real-time information allows us to deal with issues immediately before they become problems.We are satisfy with Business China.
Request a Proposal

Drop Business China a quick message to let us know about your incorporation needs.