Are you an expat residing in China for work? Then you’d better fly out today for a tax holiday this calendar year! Why? Check out our recap below to find out and get the key takeaways from our recent office event.
On Nov 11, 2018, Michelle Zhou from KPMG shared insights on the impact that the new Chinese Individual Income Tax Law has on expats residing in China.
Determination of tax residence. A Chinese tax resident is subject to tax on worldwide income; whereas a non-resident of China, is taxed only on income sourced in China. The latest law stipulates that any person having a home in China or without a home but residing in China for 183 days or more in a year, is a Chinese tax resident for that year. Under the old law issued in 2011, a person without a home in China is regarded as a Chinese tax resident only if that person resides in China for one year or more. This change is to align China’s income tax law with international practice in determining who is a tax resident.
Five-year rule remained with new requirement for tax holiday. Under the current regime, if you are away from China for more than 30 days consecutively or more than 90 days cumulatively in a calendar year, you are effectively taking the tax holiday – only your China-sourced income is subject to tax. However, under the new regime, the 90-day tax holiday day no longer works – you will have to either be away for more than 30 days consecutively or half a year (184 days) cumulatively in a calendar year. Otherwise, your global-sourced income (asset not included) is subject to tax in China.
If you want to take advantage of the five-year rule, the last day is TODAY (28 Nov) to leave China and start your tax holiday!
At the event, we also invited Mike, pianist from the US and Leo, saxphonist from Italy to deliver live jazz music for the audience. Mike explained the background the those songs and the meanings behind each of them.
Missed this event? No worries – we host similar events regularly in Shanghai, Beijing and Shenzhen. Follow us on WeChat or subscribe below to stay updated with our upcoming events!